South Korea Tightens Reporting Requirements for Foreign Crypto Accounts

South Korea's tax authorities have clarified that cryptocurrency accounts on foreign exchanges must be reported, even if the platform has ceased operations and access to funds is blocked. This ruling applies to South Korean companies and private investors with a total balance exceeding 500 million won ($350,000) in any month of the year.

The decision was made after a request from a taxpayer who became a creditor of a foreign crypto exchange that went bankrupt in November 2022. The tax service ruled that traders must disclose virtual assets held on foreign exchanges, even if access is lost due to bankruptcy or other reasons.

This new requirement may pose challenges for investors, as proving the inaccessibility of funds can be difficult. Moreover, the declaration process itself does not necessarily mean that taxes will be owed on these assets.