South Korean Government Requires Crypto Asset Owners To Report Or Get Criminal

JAKARTA - South Korea reaffirms its commitment to financial transparency by issuing a warning to crypto asset holders. Asset holders are required to report their holdings on foreign crypto exchanges or risk facing criminal charges. This move is part of the country's efforts to tighten financial and crypto regulations, responding to a surge in crypto-related crimes.

A report by Daekyung Kim, a tax accountant at Hana Bank Asset Management Group, shows that digital assets stored on exchanges outside South Korea are considered foreign assets and must be reported in accordance with the Income Tax Act. The reporting deadline is set for June 30 each year, provided that the total balance in all foreign financial accounts exceeds 500 million won.

South Korea has taken proactive steps in fighting crypto crime by forming a permanent Virtual Asset Crime Investigation Unit. The country will also implement its first comprehensive crypto regulation on July 19, which will impose stricter criminal penalties for market manipulation in the crypto industry.

Fines for individuals who fail to report account ownership details range from 10% to 20% of account balance. If the unreported crypto merchant wallet balance exceeds 5 billion won (more than 3.6 million US dollars or around Rp. 58,518 billion), the owner could face criminal charges.

The reporting process requires details such as the highest lunar end balance throughout the year and converting the balance to local currency using the exchange rate on the highest balance date. This reporting obligation applies to residents and domestic companies'' in accordance with the Income Tax Act, with different population criteria for foreigners and Koreans abroad.

South Korea's National Tax Service (NTS) sends notifications to individuals who are expected to report foreign financial accounts based on data such as previous reporting history and information obtained through international information exchange agreements. However, receiving the notification does not necessarily guarantee reporting obligations, and individuals must assess whether they meet the criteria for mandatory reporting.