South Korea to Deploy Wallet‑Tracing Software Ahead of 2027 Crypto Tax

South Korea’s National Tax Service (NTS) announced plans to adopt commercial blockchain‑tracing software to monitor digital‑asset movements between private wallets and overseas exchanges. The move is part of preparations for a new crypto income tax that takes effect on 1 January 2027.

Tax scope and rates

Crypto income generated through self‑custodied wallets and foreign platforms will be taxable. Qualifying gains above a 2.5 million‑won deduction will be subject to a combined 22 % tax (20 % national income tax plus 2 % local tax). The first filing period for 2027 income is scheduled for May 2028.

Tracing private‑wallet transactions

The NTS will employ commercial software capable of tracing and analysing transfers between blockchain addresses. Similar tools are already used by prosecutors, police and the U.S. Internal Revenue Service. The agency acknowledges that private‑wallet transactions are harder to detect because taxpayers control the assets directly, but the software is intended to close enforcement gaps.

Overseas exchange data via CARF

For crypto held on foreign platforms, South Korea will rely on the OECD’s Crypto‑Asset Reporting Framework (CARF). CARF enables automatic exchange of transaction information between participating jurisdictions. Although some jurisdictions, such as the United Arab Emirates, will begin sharing data in 2028, the information will pertain to transactions that occurred in 2027, aligning with the Korean filing timeline.

Industry coordination

The NTS has been working with domestic exchanges—including Upbit operator Dunamu, Bithumb, Coinone, Korbit and Gopax—to develop guidance on record‑keeping and reporting requirements for the new tax regime.

Regulatory background

The crypto tax was originally slated for 2022 and has been postponed several times before settling on the 2027 start date. Recent cabinet rules also impose risk‑based controls on transfers of at least 10 million won involving overseas exchanges or private wallets, extending Travel Rule obligations and requiring domestic exchanges to monitor suspicious transactions.

Political context

Some lawmakers continue to push for postponement or repeal of the tax, arguing it could drive capital to overseas platforms. Nevertheless, the government remains committed to the 2027 implementation schedule.