South Korea excludes decentralized crypto wallets from overseas declarations

South Korea’s National Tax Service (NTS) has updated its position on virtual assets.

In a new statement, NTS clarified its position regarding the owners of decentralized crypto wallets. Thus, individuals who own virtual assets through non-custodial decentralized wallets, such as MetaMask, will not be subject to reporting on financial accounts abroad.

“Overseas business operators only provide programs to store and store personal encryption keys, etc., and do not have control over them, so they are not involved in selling, buying, or exchanging, or holding virtual assets in wallets such as cold wallets are not subject to overseas financial account reporting.”

NTS statement

The service’s position became clearer after NTS included virtual assets in reporting overseas financial accounts from June 2023, requiring declarations from users with assets exceeding 500 million won.

“The purpose of reporting overseas financial accounts is to report because there are limitations in obtaining overseas tax data, but there was controversy as to whether the Metamask wallet was an overseas wallet.”

Kim Ji-ho, an NTS accountant

At the same time, the interest of South Koreans in cryptocurrencies continues to grow. In November 2023, the South Korean won overtook the U.S. dollar in terms of trading volume on cryptocurrency exchanges for the first time. Traders from Asia, especially from South Korea, have been one of the drivers of growth in trading volumes on cryptocurrency exchanges over the past couple of months. The share of South Korean exchanges in total cryptocurrency trading volume rose to 12.9% in November 2023, although in January 2023 this figure was only 5.2%.