South Korea Tax Agency Cracks Down on Cold Wallets in Crypto Seizures

South Korea’s tax authorities are intensifying efforts to crack down on crypto tax evasion, with new measures targeting the concealment of digital assets—even those stored in cold wallets disconnected from the internet. The National Tax Service (NTS) has announced plans to conduct home searches and confiscate hardware wallets and cold storage devices if suspicious activity is detected, signaling a more aggressive stance on crypto compliance amid surging adoption across the country.

South Korea’s National Tax Service is ramping up its crackdown on crypto tax evasion as the nation experiences a dramatic rise in cryptocurrency trading and ownership. An official from the NTS indicated that the agency is prepared to conduct home searches and seize physical devices such as hardware wallets and cold storage units if they suspect individuals are hiding assets offline. These measures come amid growing concerns around the use of cold wallets, which are favored for their enhanced security and disconnected nature, typically making them harder to track and tax.

The NTS employs sophisticated crypto-tracking programs to analyze transaction histories. If any suspicion of concealment arises, authorities will pursue home searches, seizure of devices, and asset liquidation. Under South Korea’s National Tax Collection Act, the government can also request account data from local exchanges, freeze accounts for tax delinquents, and liquidate assets at market value to satisfy unpaid taxes.

Crypto Enforcement Actions Already Substantial

In the past four years, South Korea has confiscated and liquidated over $108 million worth of crypto from more than 14,000 individuals. The country’s crackdown was initially prompted by the rapid boom in crypto trading, with the number of crypto investors soaring from 1.2 million in 2020 to nearly 11 million in June 2025. During this period, trading volumes skyrocketed from 1 trillion won ($730 million) to $4.7 billion, greatly expanding the scope for potential tax evasion.

The increase in crypto adoption has been mirrored by the government’s intensified efforts to combat tax evasion through digital assets. Since 2021, authorities have targeted crypto-related tax violations, collecting approximately $50 million from over 5,700 suspects before escalating their enforcement tactics.

Rising Suspicion and Crypto Transaction Monitoring

The focus on cold wallets coincides with a notable rise in suspicious transaction reports (STRs). Data from the Financial Intelligence Unit (FIU) revealed nearly 37,000 STRs filed by virtual asset service providers (VASPs) as of August 2025, already exceeding the combined total for 2023 and 2024. These reports are pivotal in South Korea’s anti-money laundering (AML) efforts and are now being generated at record levels, reflecting increased monitoring of crypto movements.

This intensified oversight underscores the government’s broader aim to regulate the fast-growing crypto markets within the country, ensuring transparency and compliance amid a landscape of expanding digital asset use and complex tax challenges.