Korea Keeps Overseas Crypto Reporting Requirement Even in Exchange Collapse

South Korea's National Tax Service has clarified that its foreign-account disclosure rules still apply to residents who hold cryptocurrency at an overseas exchange, even if the exchange collapses and they are unable to access their funds. This ruling comes just months before Seoul begins taxing crypto gains in January 2027.

The tax agency made this decision after a Korean resident asked whether they were required to report their account with a foreign exchange that had gone bankrupt. The resident had held tokens on the platform before its collapse and was still receiving partial payouts into a domestic foreign-currency account.

The National Tax Service confirmed that an account opened with a foreign virtual-asset service provider retains the reporting obligation, even if the operator goes bankrupt. This means that Korean residents must continue to report their overseas financial accounts when the combined balance tops 500 million won (around $350,000) on any month-end during the year.

The new ruling extends the existing disclosure regime to include cases where an exchange's insolvency renders the account inaccessible. This could be a challenge for those trying to prove that their balances are already gone or inaccessible, as the interface of a bankrupt exchange may still show a customer's original token balance long after the estate has become unable to return the full amount.