South Korea’s NTS Clarifies Reporting Requirements for Decentralized Wallet Owners

The South Korean National Tax Service (NTS) has clarified what owners of decentralized cryptocurrency wallets need to declare. The NTS recently said that users of decentralized wallets that are not custodial, like as MetaMask, are not required to register their foreign bank accounts.

The NTS claims that foreign company owners that offer applications for storing private encryption keys have no authority over these resources. They don’t engage in activities like purchasing, selling, trading, or storing virtual assets in cold wallets as a result. As a result, users’ funds kept in decentralized, non-custodial wallets are exempt from reporting requirements for foreign bank accounts.

Clarity Amidst Reporting Changes

The clarification comes in the wake of the NTS’s decision to include virtual assets in the reporting of overseas financial accounts starting from June 2023. The reporting requirement applies to users with assets exceeding 500 million won. The move had raised questions about the status of wallets like MetaMask and whether they would be classified as overseas wallets.

Kim Ji-ho, an accountant at the NTS, explained, “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.”

In the meanwhile, South Koreans’ interest in cryptocurrency is still growing. In November 2023, trade activity on cryptocurrency exchanges began to shift in favor of the South Korean won over the US dollar. Asian traders, especially those from South Korea, have been a major factor in the rise in trading volumes on cryptocurrency exchanges in recent months.

According to statistics, South Korean exchanges’ percentage of the overall volume of cryptocurrency trades increased from 5.2% in January 2023 to 12.9% in November 2023. This is a notable growth. The South Korean digital asset market is changing, as seen by the rising trade volume and increased interest in cryptocurrencies.