South Korea Stands Firm on Overseas Crypto Reporting Despite Exchange Collapses

The National Tax Service in South Korea has reaffirmed that crypto holders must report their overseas exchange accounts, even if they collapse and lock out users from trading or withdrawals.

This ruling comes into effect as the country prepares to tax cryptocurrency gains starting January 2027 with a combined rate of 22% (20% national plus 2% local) on annual gains above 2.5 million won.

The decision was sparked by a question from a Korean resident who held tokens on an overseas exchange that went bankrupt in November 2022 and had their account stuck in bankruptcy limbo.

The tax agency stated that even if the exchange collapses, the account remains under the reporting obligation, and the duty survives the operator's bankruptcy. This means that users must still declare their foreign exchange accounts when the combined balance tops 500 million won (around $350,000) on any month-end during the year.