Cold Wallets No Longer Safe: South Korean Tax Officers Can Confiscate Offline Crypto Directly From Homes of Tax Evaders

South Korean Tax Officers Ready To Knock On Doors To Seize Crypto Cold Wallets

South Korea’s National Tax Service (NTS) has taken an assertive step in its campaign against tax evasion — warning that officials may now visit the homes of non-compliant taxpayers to confiscate cryptocurrency stored in offline ‘cold wallets.’

The agency’s latest warning, reported by Hankook Ilbo on 9 October, reflects growing confidence in using blockchain analytics to trace crypto-related tax evasion.

It also signals a widening crackdown that extends far beyond exchanges and into the private homes of crypto holders.

How The Crackdown Is Expanding Beyond Exchanges

For years, the NTS has focused on crypto held in domestic exchange accounts, using legal powers under the National Tax Collection Act to identify, freeze, and seize assets belonging to delinquent taxpayers.

When individuals claim they cannot afford to pay, the NTS issues what it calls a “right to question and inspect” order.

Exchanges are then compelled to suspend the user’s account and transfer their crypto assets to government-controlled wallets.

If the taxpayer still refuses to pay, the agency liquidates the coins at market value.

According to official data submitted to lawmaker Kim Young-jin, the tax agency and its regional branches have confiscated and sold 146.1 billion won (around $103 million) worth of crypto from 14,140 individuals over the past four years.

NTS Now Targets Cold Wallets Hidden At Home

But authorities are no longer stopping at exchange accounts.

The NTS confirmed that it now uses blockchain tracking software to monitor crypto transaction histories and detect attempts to conceal assets offline.

A NTS spokesperson said,

“We can now monitor a non-compliant taxpayer’s crypto transaction history using blockchain protocol tracking programs. And if we suspect they are hiding their coins offline, we can conduct searches at their homes, confiscating hard drives or PCs.”

This signals a new phase in enforcement — one that effectively treats digital coins stored on hardware wallets as tangible property subject to physical seizure.

Local tax offices have already expanded their scope, targeting not just major tax defaulters but also individuals who fail to pay minor fines, such as unpaid water bills or traffic tickets.

The Overseas Loophole That Limits Seoul’s Reach

Despite its new tools, the NTS still faces major jurisdictional hurdles.

South Korean law does not extend to crypto assets held on foreign platforms or wallets managed abroad.

Hankook Ilbo reported that “problems occur in cases where non-compliant taxpayers use overseas crypto exchanges,” since the NTS must depend on cooperation from other governments to obtain details of such holdings.

While South Korea participates in the Multilateral Tax Administration Cooperation Agreement — covering 74 countries — it lacks similar arrangements with the United States, China, and Russia.

These gaps significantly weaken the agency’s ability to pursue assets hidden in foreign or decentralised platforms.

Data from the Financial Supervisory Service (FSS) highlights this challenge: during the first half of 2025, approximately 78.9 trillion won ($55.6 billion) worth of crypto was moved from South Korean exchanges to overseas platforms and private wallets, indicating a growing preference among traders to move assets beyond domestic oversight.

The Line Between Privacy And Compliance Is Fading

Coinlive believes South Korea’s evolving tax strategy raises a profound question about the future of financial privacy in the digital era.

The NTS’ home search powers blur the boundary between virtual and physical property, suggesting a future where digital assets are treated no differently from cash hidden under a mattress.

While tax compliance remains essential, the policy also exposes a deeper tension — how far governments can go in enforcing fiscal responsibility without eroding personal sovereignty over digital wealth.

The global crypto market, increasingly borderless and decentralised, may soon test how much control a single state can truly maintain over assets that exist everywhere — and nowhere — at once.