South Korea Tax Agency Weighs Crypto Tracking System, Including Non-Custodial Wallets

South Korea’s National Tax Service is moving to introduce a transaction-tracking system to combat tax evasion involving virtual assets. It 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 trace concealed crypto holdings tied to suspected tax evaders. It also aims to analyze possible inheritance and gift-tax evasion and offshore tax avoidance involving virtual assets. The findings would help determine whether to launch tax investigations and what follow-up steps to take.

The solutions under review include global crypto analytics platforms such as Chainalysis and TRM Labs, the report said. The system would also identify links between addresses based on transaction patterns while tracing fund flows.

It would also include analytics to identify and trace the use of mixers, a technique used in money laundering. Mixers obscure senders and recipients by blending transaction records, and the system is designed to break those structures apart and reconstruct the flow.

The system would cover about 70 million assets, including Bitcoin, Ether, XRP and stablecoins, and would be able to analyze about 45 blockchain networks. It is also being designed to provide some level of transaction-flow analysis for non-custodial wallets such as MetaMask and Phantom, where users hold their own keys.

The National Tax Service has steadily expanded its capabilities as tax-evasion cases involving virtual assets have increased. It has pursued similar analysis 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.