South Korea Cracks Down on Crypto Accounts at Bankrupt Overseas Exchanges

South Korea's National Tax Service has clarified that residents must still report cryptocurrency accounts held at bankrupt overseas exchanges under foreign account reporting rules. The ruling applies to residents with combined overseas financial account balances above ₩500 million (~$361,000), which must be reported to the NTS by the following June.

The clarification was made in response to a query from a South Korean resident who was a creditor of an overseas virtual asset exchange that filed for bankruptcy in November 2022. The tax agency stated that an account opened with an overseas virtual asset service provider remains subject to reporting even if the exchange later becomes insolvent.

The requirement covers qualifying accounts held with overseas virtual asset service providers alongside other foreign financial accounts. Under South Korea's Adjustment of International Taxes Act, residents and domestic companies must report their overseas financial accounts when the combined balance exceeds 500 million won at the end of any month during the year.