Independent lawmaker Kim Nam-kook, 41, who was recently caught up in a controversy over his huge coin investment, will have to report to the tax authorities next month if he has more than 500 million won in coins on overseas virtual asset exchanges.
This is because cryptocurrency accounts are included in the list of overseas financial accounts to be reported this year.
According to the virtual asset industry on the 22nd, the five largest cryptocurrency exchanges in Korea, including Upbit, Bithumb, Coinone, Korbit, and GoPax, recently announced the notification of overseas financial accounts in unison.
The exchanges said, “With the amendment of Article 52 of the Act on International Taxation Coordination, overseas financial accounts to be reported from this year include overseas virtual asset accounts,” and asked, “Please be careful not to be penalized by reporting within the reporting period.”
The Foreign Financial Account Reporting System is a system that requires residents or domestic corporations to report their account information to the tax office every June if the total balance of all their foreign financial accounts exceeds 500 million won.
It was introduced in 2010 and first implemented in 2011, and has since been revised and strengthened several times.
Initially, the reporting threshold was 1 billion won, but it was expanded to 500 million won from 2019.
As a result, if the total balance of all accounts exceeded 500 million won on one of the last days of each month last year, it will be subject to notification this year.
In June (1-30), those who are eligible can electronically report their account information via home tax, hand tax, or write it on a declaration form and submit it to the tax office with jurisdiction over their tax residence.
If the reporting obligation is violated, a penalty of 10 to 20 percent of the undeclared amount (capped at 2 billion won) will be imposed, and if the undeclared amount exceeds 5 billion won, a list of personal information will be disclosed, and imprisonment for up to two years or a fine is possible.
Previously, bank deposit and savings accounts, stock and derivatives trading accounts, etc. were targeted, but from this year, accounts opened for trading of virtual assets under the Specified Financial Information Act must also be reported.
For example, if you buy and hold more than 500 million won in Bitcoin through an overseas virtual asset exchange, you are subject to notification.
In the case of virtual assets, the asset price is calculated by multiplying the quantity at the end of the month by the final price at the end of the month. In particular, prices often fluctuate rapidly, so you should carefully check whether you are eligible.
The virtual currency industry believes that the imposition of this reporting obligation will reveal the actual situation of overseas big coin investors who have been under the radar.
The five major Korean exchanges that accept KRW deposits and withdrawals only allow spot trading of coins, not futures trading.
However, if the coins purchased on these exchanges are transferred to wallets of overseas exchanges such as Binance and Bybit, high-risk, high-return derivatives trading is possible.
As a result, investors looking for higher returns have often fled to foreign exchanges instead of domestic ones. It is estimated that there are hundreds of thousands of Korean investors with accounts on Binance alone.
In particular, there have been concerns that overseas exchanges could be used as wealth hiding places because they are difficult to track by tax authorities, unlike in Korea메이저놀이터, where real-name account verification is required.
With the change in the system, Representative Kim Nam-kook, who was found to have invested billions of won in coins in Korea, will have to report next month if he holds more than 500 million won in coins overseas.
In Korea, exchanges that deemed Kim’s large coin transactions to be abnormal reported them to the Financial Intelligence Unit (FIU), but investments made through overseas exchanges remained a blind spot in the regulations.
Top 5 Won Cryptocurrency Exchanges
[Provided by each exchange. Resale and DB prohibited].
“Given the manner and scale of Kim’s crypto investments that have been revealed so far, we cannot rule out the possibility that he may have accounts with overseas exchanges,” said a representative from the crypto industry.
The industry believes that domestic investors who flocked to overseas exchanges due to the introduction of the reporting system will return to domestic exchanges to some extent.
An official from a local exchange said, “The inclusion of virtual assets in the foreign financial account reporting target is expected to reduce the demand for overseas exchanges from so-called ‘whales’,” adding, “It may even be favorable for local exchanges.”