South Korea Targets Offline Crypto in New Tax Crackdown

The agency already confiscated more than $108 million in digital assets since 2021 amid a surge in crypto users and suspicious transaction reports. Meanwhile, Kazakhstan’s Financial Monitoring Agency also recently shut down 130 unlicensed crypto platforms and seized $16.7 million linked to money laundering schemes. The country is tightening AML regulations and implementing stricter verification rules for transactions as it wants to balance regulation with its goal of becoming Central Asia’s leading crypto hub.

South Korea Cracks Down on Hidden Crypto

South Korea’s National Tax Service (NTS) is intensifying its crackdown on crypto-related tax evasion, and warned that even assets stored in cold wallets will not be beyond the reach of tax authorities. According to a report from local outlet Hankook Ilbo, NTS officials have made it clear that if there is evidence suggesting that people are concealing cryptocurrency offline, the agency is prepared to conduct home searches and seize hard drives and cold wallet devices. 

(Source: The Korea Times)

This move is a much more aggressive phase in South Korea’s tax enforcement strategy as the use of digital assets becomes more widespread across the country. An NTS spokesperson stated that the agency now utilizes crypto-tracking software to analyze the coin transaction history of suspected tax delinquents. 

If these analyses reveal signs of offline concealment, investigators will initiate seizures under the powers granted by the National Tax Collection Act. This law allows the NTS to request information from local crypto exchanges, freeze accounts, and liquidate digital assets at market value to recover unpaid taxes.

Cold wallets, which store crypto assets offline to prevent hacking and online theft, have long been favored by security-conscious investors. However, the NTS warned that this same feature can make it easier for people to hide assets and evade tax obligations. 

Cold vs hot wallets

The agency already proved its willingness to act, as it seized and liquidated more than $108 million worth of cryptocurrency from over 14,000 people since 2021. In its first major operation in 2021, the NTS confiscated roughly $50 million from around 5,700 suspected tax evaders, and that number continued to rise in step with the nation’s growing crypto adoption.

South Korea’s crypto investor base ballooned to almost 11 million people as of June 2025, which is an almost 800% increase since 2020. Trading volumes also surged from 1 trillion won (approximately $730 million) to 4.7 trillion won ($4.7 billion) over the same period. 

This growth coincided with a sharp rise in suspicious transaction reports (STRs) filed by virtual asset service providers (VASPs). The Financial Intelligence Unit (FIU) revealed that nearly 37,000 STRs had been submitted as of August 2025, which is more than the combined totals of the previous two years and setting a new record.

Kazakhstan Seizes Millions in Crypto

Kazakhstan is also stepping up its campaign against illicit activity in the cryptocurrency sector. It shut down a record number of unauthorized platforms this year while tightening anti-money laundering (AML) regulations.

According to the country’s Financial Monitoring Agency (AFM), authorities dismantled 130 crypto platforms involved in money laundering operations in 2025 alone, which is a sharp increase from the 36 platforms that were taken down last year. The agency also confirmed the seizure of roughly $16.7 million in cryptocurrencies linked to illegal schemes.

The AFM clarified that most of the closed platforms were not conventional centralized exchanges but unregistered “crypto exchangers” — informal operations resembling physical currency exchange offices. These illicit platforms have been a growing target for regulators as Kazakhstan works to maintain transparency in its still growing crypto ecosystem. In addition to tackling money laundering, the AFM also seized around $642,000 from illegal crypto mining operations last week.

(Source: Gov.kz)

As part of its AML strategy, Kazakhstan is introducing new verification requirements for financial transactions. AFM Deputy Chairman Kairat Bizhanov announced that bank card top-ups exceeding 500,000 tenge (about $925) will now require mandatory verification of the sender’s Individual Identification Number (IIN), whereas previously only the recipient’s IIN was needed. Authorities are also considering mobile app or SMS confirmation for such transactions to improve traceability and reduce fraud.

Kazakhstan wants to position itself as a leading crypto hub in Central Asia. The country already pioneered regulatory innovation by allowing the payment of government fees in stablecoins like Tether’s USDT and recently launched one of the region’s first spot Bitcoin funds. It is also developing a state-backed crypto reserve as part of its long-term strategy to integrate digital assets into the national financial system. 

However, it is still uncertain whether the recently seized $16.7 million in cryptocurrencies will contribute to this reserve, as the legal framework for its creation is still being finalized.