South Korean crypto assets are already subject to inheritance and gift tax under current law. The National Tax Service designated five exchanges for asset valuation, with tax accountant Lee Yong-yeon stating that filing deadlines are six months for inheritance and three months for gifts. The tax authority evaluates crypto assets using the average of daily average prices over one month before and after the assessment date on designated exchanges including Dunamu (Upbit), Bithumb, Coinone, Korbit, and Streami (Gopax). Experts warn that the greater risk in succession is not taxation but loss of access to private keys, as heirs cannot recover assets from personal wallets without recovery phrases or private keys even if they are legal successors.
National Tax Service Designates Five Exchanges for Crypto Asset Valuation
The National Tax Service designated Dunamu (Upbit), Bithumb, Coinone, Korbit, and Streami (Gopax) as the five exchanges for crypto asset valuation. The valuation method calculates the average of daily average prices over one month before and after the assessment date. For other crypto assets, the valuation uses the daily average price on the transaction date or the market price announced at the closing time. Investors can verify valuation prices through the National Tax Service's Hometax 'Crypto Asset Daily Average Price Inquiry' service.
Tax accountant Lee Yong-yeon stated that when parents transfer crypto assets to children through gifts or inheritance, recipients must file and pay gift tax or inheritance tax according to current tax law. Gift tax filing is due by the end of the month three months after the gift date, while inheritance tax filing is due by the end of the month six months after the date of death. The National Tax Service can seize crypto assets if gift or inheritance tax is delinquent, and seized assets can be sold through public auction to collect unpaid taxes.
Private Key Loss Prevents Heirs from Accessing Personal Wallet Assets
Experts identify loss of access rights as a greater risk than taxation in the succession process. Crypto assets stored on exchanges allow heirs to verify accounts and transfer assets through designated procedures. Assets withdrawn to personal wallets such as MetaMask or Phantom require recovery phrases or private keys for access. If the deceased did not leave this information during their lifetime, heirs cannot transfer assets even if they know the assets exist.
Tax accountant Lee Yong-yeon stated that failure to manage mnemonics or private keys after withdrawing crypto assets from exchanges to personal wallets, or device failure, hardware loss, phishing scams, malware infection, or the owner's death, can result in loss of access to the personal wallet. He added that losing or leaking private keys allows third parties to control the wallet, and if the owner completely loses the private key, no one can recover the assets. He explained that sending to an incorrect wallet address is difficult to cancel due to errors, unlike traditional financial transactions, which is a characteristic of crypto assets.
US Adopts RUFADAA in Over 45 States for Digital Asset Succession
Digital asset inheritance has already established itself as a new asset management area overseas. In the United States, the case of crypto investor Matthew Mellon is frequently cited as a representative example showing the importance of digital asset succession. Awareness has spread that traditional succession planning alone makes it difficult to safely transfer digital assets, as heirs may know of the assets' existence but cannot access them without private keys and recovery phrases.
Since then, cases of utilizing trusts, multi-signature, and emergency access in digital asset succession design have increased in the United States and Europe. In particular, the United States has introduced the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in over 45 states, specifying legal grounds for heirs or trustees to manage digital assets under certain requirements.
Experts Recommend Legal Framework for Digital Asset Succession Disputes
South Korea has established a taxation system for inheritance and gifts, but the evaluation is that systems and infrastructure related to digital asset succession are still in the early stages. The government's 'Safe Inheritance One-Stop Service' can query financial assets, land, buildings, and automobiles, but does not provide a query function for crypto assets. Assets stored on exchanges allow heirs to proceed with verification procedures through individual exchanges, but assets stored in personal wallets are often difficult to verify if family members do not know the relevant information.
Personal wallets outside exchanges rely on private keys and recovery phrases as virtually the only means of access. If these are lost or the deceased did not leave related information during their lifetime, legal heirs may not be able to transfer assets.
Tax accountant Lee Yong-yeon stated that as the number of crypto asset holders increases, disputes over personal wallet access rights and inheritance are likely to increase. He urged that passwords and recovery phrases for crypto assets withdrawn to personal wallets must be managed safely. He recommended amending the Act on Reporting and Using Specified Financial Transaction Information or preparing separate legislation to establish legal grounds and institutional foundations for credible institutions such as the government or public organizations to resolve disputes related to digital asset inheritance.
FAQ
What is the inheritance tax filing deadline for crypto assets in South Korea?
The inheritance tax filing deadline is the end of the month six months after the date of death. Tax accountant Lee Yong-yeon stated that heirs must file inheritance tax according to current tax law.
How does the National Tax Service evaluate crypto assets for inheritance and gift tax?
The National Tax Service calculates the average of daily average prices over one month before and after the assessment date on designated exchanges including Dunamu (Upbit), Bithumb, Coinone, Korbit, and Streami (Gopax). For other crypto assets, the valuation uses the daily average price on the transaction date or the market price announced at the closing time.
What happens if heirs lose the private key to a personal crypto wallet?
Tax accountant Lee Yong-yeon stated that if the deceased did not leave recovery phrases or private keys during their lifetime, heirs cannot transfer assets from personal wallets even if they are legal successors. He explained that losing or leaking private keys allows third parties to control the wallet, and if the owner completely loses the private key, no one can recover the assets.
