South Korea’s Tax Agency Moves to Bolster Crypto Tax-Evasion Tracking, Eyes Non-Custodial Wallet Analysis

South Korea’s National Tax Service is moving to introduce a transaction-tracking system to strengthen its response to tax evasion involving virtual assets. The agency is also reviewing whether the system can analyze transaction flows involving non-custodial wallets.

ZDNet Korea reported on April 21 that the National Tax Service posted a bid notice on April 15 for a “virtual asset tax-evasion response transaction-tracking software license.” The system would monitor virtual-asset transactions in real time and visualize the flow of funds between specific wallet addresses and exchanges.

The agency plans to use the system to track concealed crypto assets held by people suspected of tax evasion. It also aims to analyze whether virtual assets were used in inheritance and gift-tax evasion or offshore tax evasion. The results would serve as reference material in deciding whether to open tax investigations and what follow-up action to take.

The solution under review is understood to include multiple global crypto analytics platforms. As it traces fund flows, the system would identify links between addresses based on transaction patterns.

The software would also include tools to detect and trace mixer techniques used in money laundering. Mixers obscure senders and recipients by blending transaction records, and the analytics system would break apart those transactions and reconstruct the flow.

The system is designed to track about 70 million assets, including Bitcoin, Ether, XRP and stablecoins, across about 45 blockchain networks, the report said. It would also be built to provide a certain level of transaction-flow analysis for non-custodial wallets such as MetaMask and Phantom, where users hold their own private keys.

The National Tax Service has steadily expanded its capabilities as tax-evasion cases involving virtual assets have increased. It has pursued similar analytics systems every year since 2024, making this the third attempt.

The agency plans to select a contractor next month, complete the system by June and begin full-scale use in July.