Korea Reaffirms Overseas Crypto Account Reporting Obligations

South Korea's National Tax Service (NTS) has reaffirmed that residents must report qualifying cryptocurrency accounts held with bankrupt overseas exchanges, even when trading and withdrawals are unavailable. This ruling came after a taxpayer asked if an inaccessible exchange balance still qualified as an overseas financial account.

The NTS concluded that the original overseas account remained subject to reporting because it was opened with a foreign virtual asset service provider to trade digital assets. The decision concerns disclosure obligations rather than whether the inaccessible assets generate taxable income.

Residents and domestic corporations must report when their combined overseas financial account balances exceed 500 million won (approximately $350,000) at the end of any month during the relevant calendar year. The rule applies even if no single account independently exceeds this threshold.

The NTS also clarified that exchange bankruptcy does not produce the same result as self-custody wallets, which are treated differently because they are not accounts opened with overseas virtual asset service providers.