South Korea Tightens Crypto Oversight as NTS Tracks Hidden Assets in Cold Storage

Highlights:

• South Korea has tightened crypto oversight as NTS moves to seize cold wallets.
• Crypto adoption rises to 11 million users, driving stronger monitoring and stricter enforcement across exchanges.
• Stablecoin trading in South Korea drops 80% as investors react to tougher asset compliance measures.

South Korea’s National Tax Service (NTS) has intensified its efforts to track hidden cryptocurrency used for tax evasion. The agency confirmed plans to seize digital assets stored in cold wallets if they belong to tax delinquents. Officials said they will monitor transaction records and conduct home searches if there is evidence of concealed funds.

JUST IN: South Korea’s tax agency launches a crackdown on crypto tax evasion, warning that assets hidden in cold wallets can be seized. Over $108 million in crypto has already been confiscated since 2021. pic.twitter.com/z0vyX3Omgj

— BNN (@brainsnewsnets) October 10, 2025

An NTS spokesperson explained that the agency analyzes coin transaction histories through crypto-tracking systems. When it detects suspicious activity, it can search homes and seize devices such as hard drives or cold wallets.

According to the National Tax Collection Act, the NTS has the authority to demand information about local exchanges and put accounts associated with the tax debt on hold. It is also able to sell confiscated crypto assets at market value in order to collect outstanding taxes.

Cold wallets are held offline, making them resistant to hackers but difficult to enforce. Wealth can also be concealed using this means of security in order to postpone investigations. NTS indicated that the introduction of cold wallets in its operation is an even rougher approach to its fight against tax evasion since the digital assets are becoming popular. Authorities are confident that tougher measures would guarantee equitable taxation in both the conventional and online marketplace.

Rising Adoption Prompts South Korea to Tighten Crypto Oversight

The rate of crypto use in South Korea has grown exponentially, prompting tax authorities to increase their monitoring. By June 2025, the number of citizens who own cryptocurrency has reached almost 11 million, compared to 1.2 million in 2020. The country also elected a pro-crypto president back in June, who campaigned on the promise of favourable crypto laws.

This increase in activity has also seen a rise in cases of crypto-related tax evasion. The NTS started targeting evaders’ digital holdings in 2021 and confiscated about $50 million from 5,700 people. Since then, the agency has seized nearly $108 million in cryptocurrency from more than 14,000 individuals. These efforts demonstrate how the government is increasing its control over crypto assets.

Data from the Financial Intelligence Unit (FIU) shows that enforcement levels have reached new highs. Virtual asset service providers reported nearly 37,000 suspicious transactions by August. The local governments have also begun freezing wallets linked to delinquent taxpayers.

Some Seoul districts are now using automated systems that identify and seize digital assets tied to unpaid taxes. These programs allow faster recovery and help strengthen tax collection procedures nationwide. However, enforcing similar actions against cold wallets remains uncertain since such devices operate offline.

Stablecoin Market Faces Sharp Decline

South Korea’s stablecoin trading volume has dropped sharply over the past six months. Daily transactions fell by 80% between December last year and June this year. From ₩1 trillion ($730 million) late last year, activity declined to just ₩200 billion by mid-2025.

📍Thị trường Hàn Quốc nguội lạnh: Khối lượng giao dịch stablecoin tại Hàn Quốc sụt 80%

📌 Sáu tháng qua, khối lượng giao dịch #stablecoin tại Hàn Quốc – bao gồm #USDT, USDC và USDS – đã lao dốc từ hơn ₩1 nghìn tỷ (~$730M) xuống chỉ còn ₩200 tỷ (~$146M).… pic.twitter.com/dl36iA4Uaf

— Emily Vuong (@emilyyvuong) October 10, 2025

Data submitted to the National Assembly shows that volumes remained steady early this year before a steep fall began in the second quarter. Analysts said the decline reflects weaker investor demand and stricter compliance measures across the crypto sector.

Cryptocurrency derivatives have also been banned, which decreased the usage of stablecoins. Investors currently use stablecoins primarily to make direct purchases rather than to engage in speculative trading. This change has limited liquidity and slowed overall exchange activity despite favourable stablecoin legislation being presented in the country.