South Korea’s tax agency announced today that taxpayers have declared overseas cryptocurrency assets worth 130.8 trillion won ($98.5 billion) this year following the introduction of mandatory reporting requirements.
This shows a rise from the previous year’s figures, indicating the increasing importance of cryptocurrencies in the country’s financial landscape.
South Korea’s tax law requires citizens possessing over 500 million won in assets, including cryptocurrencies, in foreign accounts to report their holdings to the authorities.
The National Tax Service outlined an increase in the total reported amount of overseas assets, including cash and securities. This figure rose to a record high of 186.4 trillion won, an increase from the previous year’s 64 trillion won. It also revealed that 1,432 individuals and companies complied with the new regulation by reporting their overseas cryptocurrency holdings.
According to the report, overseas cryptocurrency assets represent a significant portion, making up 70.2% of the total value of foreign assets declared. This highlights the increasing influence of digital currencies on the nation’s wealth portfolio.
Regarding the geographical distribution of overseas accounts, South Korean companies favored the United States as the top destination, followed by Japan and Britain. Regarding individuals, the United States was also the preferred location, with Singapore and Hong Kong as the subsequent choices.
However, it’s important to mention that the breakdown by destination does not include cryptocurrency assets. This is because accurately tracking their geographical location on exchange platforms poses inherent difficulties.
The increase in reporting occurred following the implementation of cryptocurrency-related bills by South Korean lawmakers in June, which were introduced to improve investor protection and regulatory oversight.
These 19 bills give the Financial Services Commission and the Bank of Korea the power to regulate cryptocurrency operators and asset custodians, making the regulations easier to understand. Additionally, the new legislation empowers authorities to enforce penalties for unfair trading practices involving virtual assets.
Looking ahead, the Financial Services Commission has revealed plans to introduce new accounting rules that will require domestic companies to disclose their cryptocurrency holdings starting next year.
These regulations will necessitate transparency regarding cryptocurrency assets and require issuers to disclose comprehensive information, including token details, business models, and internal accounting policies.