South Korea’s Tax Agency Starts Building Crypto Analysis System to Track Wallet Addresses

South Korea’s National Tax Service has begun building a dedicated system to track and analyze virtual-asset, or cryptocurrency, transactions.

The Seoul Regional Tax Office’s information center and Nanae SMI held a plaque-unveiling ceremony on May 8 to officially launch the virtual-asset integrated analysis system project, Aju Korea reported on May 11. The project is due to be completed by the end of December, with a total budget of 2.99 billion won ($2.2 million).

The NTS sees a rising number of cases in which the anonymity and decentralized nature of virtual assets are exploited for illegal transactions, including money laundering, disguised gifts and offshore tax evasion. It also concluded that it needs an IT platform capable of systematically managing and analyzing large volumes of transaction data, as virtual-asset service providers will be required to submit individual transaction records to the agency starting in 2027.

The system will periodically collect and centrally manage transaction statements, transaction summary tables and blockchain transaction data submitted by virtual-asset service providers. It will also be designed to link that data with existing tax records, including filings, taxpayer registry data and investigation materials, allowing integrated searches across those databases. The platform is set to provide taxpayer-specific information such as transaction summaries, changes in virtual-asset holdings and account balances.

The agency also plans to strengthen transaction-flow tracking by combining identified wallet addresses with blockchain transaction data and visualizing the results. The system will include functions to analyze and verify transactions suspected of tax evasion, including money laundering and failures to report inherited or gifted assets. It also plans to build a framework using artificial intelligence, machine learning and statistical methods to detect unusual transaction patterns and suspicious traders.

In addition, the agency plans to automate manual tasks and improve search convenience by linking a range of data sources. It also intends to establish controls, including authority management and access-log management, so transaction information is used only within the minimum necessary scope.