South Korea Updates Position on Virtual Assets
The National Tax Service (NTS) of South Korea has provided a new statement clarifying its position on virtual assets. According to the NTS, individuals who own virtual assets through non-custodial decentralized wallets, such as MetaMask, will not be required to report their financial accounts abroad. This is because overseas business operators that provide programs for storing personal encryption keys do not have control over the assets and are not involved in buying, selling, exchanging, or holding virtual assets.
“Overseas business operators only provide programs to store and store personal encryption keys, etc., and do not have control over them, so they are not involved in selling, buying, or exchanging, or holding virtual assets in wallets such as cold wallets are not subject to overseas financial account reporting.”
NTS statement
This clarification from NTS comes after the inclusion of virtual assets in reporting overseas financial accounts starting June 2023. Users with assets exceeding 500 million won are required to make declarations. The purpose of this reporting is to address limitations in obtaining overseas tax data. However, there was controversy surrounding whether wallets like MetaMask should be considered overseas wallets.
Growing Interest in Cryptocurrencies in South Korea
Despite the regulatory updates, interest in cryptocurrencies among South Koreans continues to rise. In November 2023, the trading volume of the South Korean won surpassed that of the U.S. dollar on cryptocurrency exchanges for the first time. Traders from Asia, particularly South Korea, have played a significant role in driving up trading volumes on these platforms over the past few months. In November 2023, South Korean exchanges accounted for 12.9% of the total cryptocurrency trading volume, compared to just 5.2% in January 2023.
Hot Take: South Korea Provides Clarity on Reporting Virtual Assets
The National Tax Service of South Korea has issued a statement that brings clarity to the reporting requirements for individuals who own virtual assets through non-custodial decentralized wallets. According to the NTS, users of wallets like MetaMask will not be subject to reporting on financial accounts abroad since the overseas business operators providing these wallets do not have control over the assets. This update comes as virtual assets were included in the reporting of overseas financial accounts starting June 2023. Meanwhile, South Korea’s interest in cryptocurrencies continues to grow, with the South Korean won surpassing the U.S. dollar in trading volume on cryptocurrency exchanges. Traders from Asia, particularly South Korea, have been key contributors to the increased trading volumes in recent months.
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