Increased Adoption of Crypto Assets in South Korea
Crypto assets like Bitcoin and Ether have gained significant popularity in various countries, including South Korea. The country’s tax organization recently revealed that cryptocurrencies make up the largest portion of taxpayers’ overseas assets. To ensure transparency, South Korea has implemented a new tax policy requiring citizens to declare their offshore assets annually. This includes individuals who own 500 million won or more in assets, including cryptocurrencies, stored in offshore accounts or exchanges.
Crypto Assets Account for 70% of South Koreans’ Overseas Holdings
In a report published by South Korea’s National Tax Service (NTS), it was disclosed that 5,419 individuals and organizations declared their overseas financial accounts in 2023. Among these entities, 1,432 reported holding cryptocurrencies in their offshore accounts. The data revealed that South Koreans declared a total of 130.8 trillion won (approximately $98 billion) in overseas crypto holdings, representing over 70% of the reported overseas assets.
While cryptocurrencies accounted for the highest value, deposit and savings accounts were the most frequently reported assets. A total of 2,952 entities declared 22.9 trillion won (around $17 billion) held in such accounts. Overall, South Korean taxpayers reported a total of 186.4 trillion won ($140 billion) as their overseas assets, including crypto assets, deposit/savings accounts, and stocks valued at 23.4 trillion won ($17.6 billion).
Ramping Up Crypto Regulatory Efforts
South Korea has established itself as a crypto-friendly nation in Asia and has taken steps to strengthen oversight of its crypto landscape through clear regulations. The country’s regulators have been actively monitoring various crypto markets due to an increase in illicit activities, particularly focusing on unregulated OTC crypto trading. Additionally, South Korea has been cracking down on tax evasion involving crypto assets and has confiscated millions of dollars’ worth of cryptocurrencies from defaulting citizens.
The government had initially planned to impose a 20% capital gains tax on crypto assets in 2023 but delayed its implementation until 2025. This delay gives more time for stakeholders to prepare for the new tax regulations.
Hot Take: South Korea Takes a Stand Against Tax Evasion and Promotes Crypto Regulation
South Korea’s tax organization’s disclosure regarding the significant proportion of crypto assets in taxpayers’ overseas holdings highlights the growing adoption of cryptocurrencies in the country. By implementing stricter tax policies and increasing regulatory efforts, South Korea aims to combat tax evasion and ensure transparency in the crypto market. These measures demonstrate the country’s commitment to fostering a regulated and secure environment for crypto activities. With its proactive approach, South Korea is positioning itself as a leading jurisdiction for crypto innovation while addressing concerns related to illicit activities and tax compliance.
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