South Korean Tax Authority: Settle Your Debts or We Will Seize Your Cryptocurrency Wallets

The South Korean tax authority has informed cryptocurrency holders that officials will visit their residences to confiscate cold wallets if tax obligations are not met.

The South Korean publication Hankook Ilbo reported that these statements were made by the National Tax Service (NTS) on October 9.

A tax office in the South Korean city of Paju. (Source: Choi Gwang-mo [CC BY-SA 4.0])

South Korean Tax Authority: We Can Confiscate Your Cold Wallet

Tax authorities nationwide have already initiated crackdowns on local tax evaders who maintain crypto wallets on domestic trading platforms.

Recently, municipal authorities have broadened these efforts to include individuals who neglect to pay water bills and traffic fines.

However, the NTS’ warning indicates that the agency recognizes that numerous crypto holders store their assets offline, utilizing self-custody methods. A spokesperson for the agency stated:

“We can now track a non-compliant taxpayer’s crypto transaction history using [blockchain protocol] monitoring programs. If we suspect they are concealing their assets offline, we can perform searches at their residences, seizing [hard drives or PCs].”

Nonetheless, a significant obstacle appears to hinder the NTS’ efforts. The newspaper noted:

“Challenges arise in situations where non-compliant taxpayers utilize foreign crypto exchanges. As domestic law does not extend internationally, the [NTS] must depend on the cooperation of foreign governments to ascertain the nature of a delinquent taxpayer’s assets.”

While the Multilateral Tax Administration Cooperation Agreement permits Seoul to collaborate with 74 countries on tax collection issues, this may not suffice.

South Korea lacks such agreements with the United States, as well as with countries like China or Russia.

Moreover, there is evidence indicating that a growing number of South Korean crypto traders are opting for foreign or decentralized platforms over domestic ones.

Data from the Financial Supervisory Service (FSS), one of the nation’s leading financial regulators, reveals that in the first half of this year, the volume of crypto transferred from domestic exchanges to overseas entities or individual wallets reached 78.9 trillion won ($55.6 billion).

Inside a tax office in Seoul, South Korea. (Source: Cryptonews.com)

How Does The NTS Seize Crypto from Domestic Exchange Wallets?

According to the National Tax Collection Act, the tax agency is authorized to issue “right to question and inspect” orders on specific accounts.

The NTS typically issues these orders to exchanges in cases of repeated non-payment, especially if suspected tax evaders assert they are unable to pay their outstanding debts.

If the NTS’ investigations confirm that the individual possesses crypto, the exchange responds by suspending their wallets.

A comprehensive stock swap between Naver Financial and Dunamu could significantly enhance Naver’s corporate value and expedite its entry into the digital asset payments sector, analysts stated Friday.https://t.co/fvuk1zan7S

— The Korea Times (@koreatimescokr) September 27, 2025

All assets in the account are then transferred to the NTS’ own wallets. Some local tax authorities subsequently issue ultimatums to crypto holders, warning that the tax agency will liquidate the tokens if the holders do not resolve their tax obligations.

If they do not respond, the agency promptly sells the crypto for fiat “at market price.”

According to NTS data provided to the offices of Democratic Party lawmaker Kim Young-jin, the tax service “has seized and collected virtual assets from 14,140 delinquent taxpayers over the past four years.”

This has resulted in the NTS and its regional branches liquidating 146.1 billion won ($103 million) worth of crypto during the same timeframe.

The post S Korean Tax Agency: Pay Your Bills or We’ll Take Your Crypto Cold Wallets appeared first on Cryptonews.