South Korea Requires Reporting of Crypto Accounts at Bankrupt Overseas Exchanges

• South Korea says crypto accounts at bankrupt overseas exchanges still fall under its foreign account reporting rules.
• Residents with combined overseas financial account balances above ₩500 million must report them to the NTS the following June.

South Korea’s National Tax Service (NTS) has clarified that residents may still have to report cryptocurrency accounts held with overseas exchanges even after those platforms have gone bankrupt and customers can no longer trade or withdraw their assets.

The NTS issued the interpretation on August 28 after a South Korean resident asked whether an account with a bankrupt overseas crypto exchange remained subject to the country’s foreign financial account reporting rules. The resident was a creditor of an overseas virtual asset exchange that filed for bankruptcy in November 2022. The account could no longer be used for normal trading or withdrawals, and the assets had become part of the bankruptcy process.

Bankruptcy Does Not Remove Reporting Requirement

The tax agency said an account opened with an overseas virtual asset service provider for digital asset transactions remains subject to reporting even if the exchange later becomes insolvent. The ruling focuses on the account reporting requirement and does not itself determine whether the assets are subject to additional tax.