South Korea turns to AI to track crypto profits ahead of digital asset tax

South Korea is preparing to strengthen oversight of cryptocurrency trading as authorities move closer to implementing a long-delayed tax on digital asset gains.

The country’s tax authority plans to deploy artificial intelligence to analyse cryptocurrency transaction data, aiming to identify investment profits and detect possible tax evasion before the new tax regime takes effect.

According to a report by The Korea Times on Thursday, the National Tax Service has opened a bid to build an AI-backed monitoring system designed to analyse large volumes of digital asset trading data.

The platform will form part of preparations for a cryptocurrency tax framework expected to begin in January 2027 as authorities expand oversight of the fast-growing digital asset market.

AI crypto monitoring system

The project is valued at approximately 3 billion Korean won, roughly $ 2.3 million, and aims to create an integrated platform capable of processing large volumes of cryptocurrency transaction data from exchanges and other digital asset platforms.

The National Tax Service plans to use artificial intelligence and machine learning to identify unusual transaction patterns and detect possible tax evasion linked to digital asset trading.

By analysing transaction flows and behavioural patterns, the system is designed to uncover hidden income and identify traders who may not accurately report profits from cryptocurrency investments.

System development timeline

According to The Korea Times, the National Tax Service plans to select a contractor by March.

Once a developer is chosen, the system design phase is expected to begin in April.

Testing phases are scheduled throughout the year. A pilot programme is planned for November, with the system expected to launch between November and December.

Officials say the platform will help the tax authority systematically manage and analyse large datasets of virtual asset transactions collected from trading platforms and related financial channels.

Crypto tax enforcement tools

The platform is expected to support tax audits and improve oversight of digital asset trading profits.

Authorities plan to use the system to identify hidden income and detect possible tax evasion among delinquent taxpayers.

The National Tax Service also plans to share analysis data and lists of suspected offenders with other government bodies involved in financial monitoring.

According to the report, agencies such as the Korea Customs Service and the Bank of Korea may receive information derived from the platform’s analysis.

South Korea prepares crypto tax rollout

South Korea’s cryptocurrency tax policy has faced repeated delays despite being approved years earlier.

The framework was first passed in 2020 but has been postponed several times as lawmakers debated implementation and tax thresholds.

In 2024, policymakers discussed whether to introduce the tax in 2025 or delay it again amid industry opposition and political disagreements over the proposed rules.

The tax has already been delayed three times since the law was passed.

Under the current plan, the government is preparing to introduce the tax in January 2027.

The policy will impose a 20% income tax and a 2% local tax on annual cryptocurrency gains exceeding 2.5 million won, about $1,700.