Korea Tax Chief Says Tracking Between Personal Crypto Wallets Has Limits, Cites Gaps in Tax Readiness

National Tax Service Commissioner Lim Kwang-hyun said there are practical difficulties in identifying transactions between personal crypto wallets and that institutional fixes will take time.

Lim made the remarks on Oct. 13 during a parliamentary audit by the National Assembly's Strategy and Finance Committee at the government complex in Sejong, responding to a question from People Power Party lawmaker Park Soo-young about preparations for crypto taxation. He said transactions that are difficult for tax authorities to verify, such as transfers between personal wallets, are a common issue even in countries that already tax virtual assets.

Lim also stressed the need for international cooperation, saying crypto assets are a new area distinct from traditional financial products. Tax chiefs from various countries have continued discussing ways to identify new types of transactions and reduce blind spots in taxation, he added, saying the issue is one that will take time to resolve.

The audit also raised concerns that domestic exchanges are not sufficiently prepared on the systems side ahead of the planned start of crypto taxation in January 2027. According to materials obtained by Park, Upbit is developing a tax system, but Bithumb has not yet begun development. Coinone has delayed construction until the relevant tax law is finalized, while Korbit is conducting interface verification. Streami was also found to be in the early stages of reviewing the direction of its system design.

Park said with only about three months left until the tax takes effect, exchanges should already have completed their systems and begun test operations. He also cited the risk of withholding tax errors for non-residents and the possibility that tax standards could differ by exchange. Park added that authorities need to check whether income can be calculated accurately across a range of transactions, including staking, airdrops, decentralized finance, or DeFi, and token swaps. Lim said the tax agency is continuing consultations with exchange officials and will review the state of preparations again.

On the tax schedule, Lim said gains from crypto transactions generated in 2027 will be subject to taxation, with taxpayers filing in May 2028. He added that regardless of any future decision on whether to proceed with implementation, the agency is continuing practical preparations, including computer systems, to avoid disruption to administrative enforcement.