South Korea to Seize Cold Wallets in Widening Crypto Tax Crackdown

TLDR

• South Korea’s National Tax Service will now seize crypto assets stored in cold wallets.
• The agency is prepared to conduct home searches to locate hidden offline digital assets.
• Tax delinquents are using cold wallets to avoid detection and asset tracking.
• Over 14,000 individuals have had cryptocurrency seized by the NTS in the past four years.
• South Korea is expected to have nearly 11 million crypto investors by 2025.

South Korea is tightening its grip on crypto-related tax evasion by authorizing home searches and the seizure of cold wallets. The National Tax Service (NTS) confirmed it will confiscate hardware wallets if tax dodgers store assets offline. This marks a significant expansion in South Korea’s crypto tax enforcement.

NTS Broadens Crypto Seizure Tactics

South Korea’s National Tax Service announced a stricter stance on crypto tax evasion this week. The agency will now target digital assets held in cold wallets, not just exchange accounts. It aims to close loopholes used by delinquent individuals to evade asset taxation.

Officials explained that cold wallets, which are offline storage devices, complicate traditional asset tracking and management. Therefore, the NTS is conducting physical searches of residences suspected of crypto concealment. “We analyze coin transactions using tracking programs and proceed with seizures if offline storage is suspected,” an NTS official said.

Under South Korea’s National Tax Collection Act, the agency can freeze exchange accounts and liquidate seized assets. Now, this authority extends to physical devices, such as USB-based wallets. This shift reflects the country’s growing concern over crypto-related tax evasion.

South Korea’s Crypto User Base Skyrockets

The crypto market in South Korea has grown rapidly, adding urgency to regulatory enforcement. As of June, nearly 11 million South Koreans held digital assets, compared to just 1.2 million in 2020. That’s an increase of more than 800% in five years.

The Hankook Ilbo reported that trading volume surged from 1 trillion won to 6.4 trillion won in the same period. This massive rise signals a significant shift toward mainstream adoption. Consequently, South Korea is adapting its tax oversight strategies to match this trend.

The increased adoption of crypto has led to a surge in tax evasion. The NTS began targeting such evasion in 2021 and has since escalated efforts. It has already seized $108 million worth of crypto assets from more than 14,000 individuals.

Suspicious Transactions Reach Record Highs

This expanded crackdown comes as suspicious crypto transactions continue to increase sharply in South Korea. The Financial Intelligence Unit (FIU) stated that VASPs had filed nearly 37,000 suspicious transaction reports by August 2025. That number surpasses the combined totals for both 2023 and 2024.

STRs are vital for enforcing the country’s Anti-Money Laundering laws. Their growth reflects both higher crypto usage and evolving fraud tactics. As a result, South Korea’s regulatory bodies are under pressure to respond swiftly and effectively.

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