South Korea has agreed to share information on crypto transactions with as many as 48 states, as per the agreement on the OECD’s Crypto-Asset Reporting Framework.
Summary
- South Korea aims to strengthen crypto tax monitoring through the OECD’s Crypto-Asset Reporting Framework.
- Starting 2027, crypto services are mandated to share crypto transaction history and tax-related information to the local tax department.
The South Korean government will start sharing information regarding local and foreign investors trading cryptocurrency on crypto asset exchanges like Upbit and Bithumb, with data collection starting next year. Meanwhile, the system will officially be enacted in early 2027.
Not only that, the transaction history of local investors will also be shared with the nation’s tax department. This means that Crypto exchanges are obligated to report transaction history as well as investors’ personal information to their respective tax authorities starting next year.
These measures are taken as part of the Crypto-Asset Reporting Framework, a program initiated by the Organization for Economic Co-operation and Development or OECD. Member states who are part of the OECD will be expected to automatically share crypto exchange information with at least 48 to 74 countries, including the U.K, Germany, Japan and other states.
Based on the terms of the agreement, an exchange of crypto asset data will only take place if the other partner state also agrees to share their crypto asset data with South Korea.
According to insiders, the Ministry of Economy and Finance plans to issue an administrative notice this month to investors detailing implementation regulations of the new crypto data sharing framework.
“The purpose is to establish detailed regulations for implementing the Virtual Asset Information Exchange Agreement,” said the Ministry in an official statement, quoted by local media.
According to data from national agencies, the amount of foreign crypto transactions recorded this year reached as much as KRW 11.1 trillion ($790 million), marking an increase of KRW 700 billion ($503.3 million) compared to the previous year.
Why is South Korea sharing crypto information?
The timing of the reporting framework, which starts in 2027,also coincides with the nation’s Crypto Tax bill. Last year, regulators agreed to postpone a bill that would raise the local crypto tax by 20% by two years.
The Crypto-Asset Report Framework made by the OECD was created with the aim of combating cross-border tax evasion by enhancing tax transparency across countries amidst the rapidly evolving crypto market.
The framework mandates crypto asset service providers or CASP to collect and report on information such as user tax residencies and tax identification numbers to the system. Providers are expected to report annually on unusual or large transactions based in crypto. The OECD hopes to strengthen its radar on detecting money laundering, crypto-related fraud and tax evasion.
Over the years, South Korea has seen an increase in crypto fraud cases, particularly tax evasion. In 2021 and 2022, the South Korean government seized around $180 million worth of cryptocurrencies collected from tax evaders.
