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- Next month, Gwacheon, a city in South Korea, will roll out an electronic system aimed at identifying cryptocurrency tax evaders, with plans to extend its use across Gyeonggi Province.
- The Seoul Southern District Prosecutors’ Office task force, initially formed in July 2023, is set to expand its authority to strengthen efforts against cryptocurrency crimes.
Governments worldwide are rapidly implementing crypto regulations to enhance investor and trader safety. South Korea is following this trend, with the city of Gwacheon set to introduce an electronic crypto seizure system next month to target tax evaders hiding wealth in cryptocurrency.
Gwacheon officials plan to use Information Technology solutions across Gyeonggi Province to identify crypto wallets belonging to local tax evaders. Gwacheon City plans to target 361 individuals who owe more than 3 million won in local taxes, totaling approximately 18.8 billion won in arrears. Authorities will track hidden assets by comparing delinquent taxpayers’ information with data from domestic virtual asset exchanges.
Although South Korea has postponed its proposed 20% crypto tax until at least 2027, local tax agencies have been granted the authority to seize digital assets from suspected tax evaders. Gwacheon officials will issue warnings, urging compliance before seizing the assets. If the tax debt remains unpaid by the deadline, authorities will proceed with asset seizures.
Gwacheon City Tax Division Chief Kang Min-ah emphasized the importance of the initiative, stating that strong enforcement ensures fairness for law-abiding taxpayers. As revealed, Gwacheon authorities have confiscated approximately 300 million won in crypto from tax evaders in the past 5 years, including 110 million won in 2024 alone.
South Korea Expands Crypto Crime Task Force
In a move to intensify its efforts against crypto-related offenses, South Korea is preparing to transition its specialized task force into a permanent investigative unit. The Ministry of Justice in South Korea is looking to modify the Enforcement Decree of the Prosecutor’s Office Act, which would allow the Joint Investigation Department (JIU) for Virtual Assets to become a permanent body with enhanced resources to investigate and prosecute crypto-related crimes.
South Korea is known for its strict crypto regulations, with authorities consistently strengthening AML rules and exchange compliance measures. In July 2024, the Financial Services Commission (FSC) enacted its first law aiming to combat unfair trading practices.
Additionally, in November, officials in the South Korean city of Paju, located in Gyeonggi Province, unveiled plans to confiscate and liquidate the cryptocurrency holdings of citizens with outstanding tax debts. City officials issued notices to 17 individuals with unpaid taxes totaling 124 million won, roughly equivalent to $88,600.
Amid these regulatory developments, the Korea Exchange is evaluating international models to inform its framework for reintroducing cryptocurrency exchange-traded funds (ETFs) by 2025, fueled by the strong performance of Bitcoin and Ethereum ETFs in the previous year. Moreover, Jeju Island is set to launch NFT-based travel cards in 2025, which will seamlessly integrate with the island’s Tamna Jeon stablecoin, offering visitors exclusive travel perks and discounts on attractions for a more enriching experience.
