South Korea's National Tax Service Rules on Reporting Bankrupt Crypto Accounts

Korean residents must report qualifying overseas cryptocurrency accounts held at bankrupt exchanges, even if trading and withdrawals are unavailable. According to the National Tax Service, this includes accounts with balances exceeding 500 million won ($350,000) at any month-end annually.

The ruling applies when a customer's original account was opened with a foreign virtual asset service provider for digital assets. This means that even if an exchange goes bankrupt and customers can no longer access their funds, they must still report the account balance.

The NTS clarified this interpretation after a taxpayer asked whether an inaccessible exchange balance qualified as an overseas financial account. The taxpayer was receiving partial bankruptcy distributions through a domestic foreign-currency account but had entered the exchange's distribution process and could no longer trade or withdraw assets.