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Additional districts in Seoul will confiscate and liquidate cryptocurrency from residents who neglect to pay their local taxes, as regions in South Korea intensify a nationwide enforcement effort.
The South Korean news outlet EDaily reported that Gwanak, a district in Southern Seoul, will require the nation’s five fiat-trading cryptocurrency exchanges to provide information on residents who are in “arrears.”
Seoul Districts Target Cryptocurrency
This district, similar to officials in the Seoul satellite city of Gwacheon, states it is reacting to recent “increases” in the “transaction volume of the digital asset market.”
Officials from Gwanak indicated they will investigate a “total of 325 delinquent taxpayers” in the coming weeks. This group collectively owes the Gwanak District 1.036 billion won (over $714,000).
Gwanak District on a map of Seoul. (Source: Kurykh [CC BY-SA 3.0])
In previous years, provinces and metropolitan areas have conducted similar initiatives. They have confiscated millions of USD worth of Bitcoin (BTC) and other cryptocurrencies from local tax evaders.
However, Gwanak’s action appears to indicate that individual districts in Seoul will now initiate independent investigations into “routine” tax offenders.
Gwacheon’s own initiative also suggests that this is now becoming applicable to smaller cities in South Korea.
If they discover cryptocurrency belonging to these individuals, districts and smaller municipal governments will freeze their cryptocurrency wallets.
If token holders fail to resolve their tax obligations, South Korean tax authorities at all levels now possess the authority to liquidate assets.
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Analyzing Wallet Data
Gwanak stated it is operating “in cooperation with the Seoul Metropolitan Government.”
The Gwanak District Chief Park Jun-hee mentioned that the cryptocurrency wallet investigation would assist in “completely blocking unscrupulous tax delinquents” from “using cryptoassets as a means of concealing their wealth.”
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Seoul Districts, provinces, and major cities derive their authority to compel cryptocurrency exchanges to comply from two primary sources.
The first is a 2018 Supreme Court ruling. The court determined that Bitcoin and other tokens are “intangible assets with property value.” This classification makes them “subject to confiscation.”
The second source emerged in 2022, when lawmakers passed an amendment to the Local Tax Collection Act.
This provision enables local tax authorities to initiate “seizure and liquidation procedures” for “delinquent taxpayers’ digital assets.”
In recent months, tax authorities nationwide have sought to leverage this. Many have invested in tools that allow them to match their own data on tax evaders with cryptocurrency exchange wallet information.
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