South Korean parents gift $3 million in crypto to children as tax scrutiny looms

Crypto gifts to South Korean minors reached 4.03 billion won ($3 million) in 2025, nearly tripling from 1.47 billion won a year earlier, National Tax Service data submitted to Democratic Party lawmaker Jung Tae-ho showed.

The surge comes as Seoul prepares to expand tax oversight of virtual assets starting January 1, 2027, giving authorities broader access to records from exchanges such as Upbit and Bithumb.

Crypto gifts rise as transfers to minors accelerate

The broader trend shows how quickly cryptocurrency has become part of intergenerational wealth transfers in South Korea. According to NTS data, 423 virtual-asset inheritance and gift cases worth a combined 45.86 billion won were reported last year.

Compared with 2024, the number of cases increased by 240 percent, while their combined value jumped 340 percent.

Within that total, 103 cryptocurrency gift transactions involved minors aged 18 or younger, up from 53 a year earlier. The number of crypto gifts to minors therefore nearly doubled, while their total value increased substantially.

Children aged 11 or younger accounted for an especially notable portion of the increase. The number of transfers to this age group climbed from 28 to 65 in one year. Their combined value surged to 2.35 billion won from 774 million won, roughly tripling over the period.

Minors represented nearly one-third of the 360 virtual-asset gifts reported last year, according to the tax data.

The figures indicate that cryptocurrency is increasingly being used alongside more traditional forms of family wealth transfer. However, the reported transactions may not capture the full scale of transfers taking place.

Crypto gifts face tighter tax oversight from 2027

The surge in crypto gifts comes shortly before a major expansion of South Korea’s financial information system. Under the government’s 2026 tax reform plan announced in August, virtual asset service providers will be included in comprehensive financial asset reviews from Jan. 1 next year.

The NTS already has authority to examine the financial holdings of deceased individuals and donors when assessing inheritance and gift taxes. Until now, those reviews have focused on institutions such as banks, securities companies and insurers.

Beginning next year, the scope will expand to virtual asset service providers, including Upbit and Bithumb. That will give tax authorities easier access to information needed to assess whether cryptocurrency transfers have been properly reported.

Virtual asset service providers will also be subject to NTS inquiries and investigations involving inheritance and gift taxes. As a result, previously difficult-to-detect cryptocurrency transfers could become more visible to tax officials.

“We plan to strengthen oversight of inheritance and gift taxes involving virtual assets through more systematic reviews,” an NTS official said.

The changes are expected to make it harder for taxpayers to omit cryptocurrency transfers from gift or inheritance declarations.

Crypto gifts collide with new investment taxes

The government’s broader approach to cryptocurrency taxation also includes a separate tax on investment gains. Under revisions to the Income Tax Act, annual profits exceeding 2.5 million won from virtual asset investments will be treated as miscellaneous income and separately taxed from Jan. 1.

The effective tax rate, including local taxes, will be 22 percent.

For example, an investor who generates 12.5 million won in cryptocurrency profits would first apply the 2.5 million won tax-free allowance. The remaining 10 million won would then be subject to the 22 percent rate, producing a tax bill of 2.2 million won.

The changes give greater significance to the timing and valuation of crypto gifts, particularly for families seeking to transfer assets while remaining within existing tax-free thresholds.

Under South Korea’s Inheritance Tax and Gift Tax Act, the tax-free allowances for family gifts apply to cryptocurrency in the same way they apply to cash and other financial assets.

Over a 10-year period, a spouse can receive up to 600 million won tax-free, while an adult child can receive up to 50 million won and a minor child up to 20 million won.

No gift tax is payable when the assessed value remains below the applicable threshold.

However, cryptocurrency’s volatility introduces another layer of uncertainty. A transfer that appears tax-efficient when made could have a different tax outcome if the value of the asset changes significantly.

Crypto gifts raise concerns over hidden transfers

The increase in reported crypto gifts may represent only part of the actual movement of digital assets between family members.

Analysts cited in the report said transfers involving private wallets, transactions between exchanges or assets held under another person’s name may not be fully captured by the existing tax system. That raises concerns about whether authorities can accurately measure the scale of cryptocurrency being transferred between generations.

The issue has prompted calls for improvements to the country’s system for obtaining cryptocurrency-related tax information.

“The system for obtaining tax information needs further improvement to cover transfers between individuals, overseas transactions and private wallets,” Rep. Jung said. “As intergenerational wealth transfers through virtual assets increase, authorities need to accurately assess the extent of such gifts and strengthen the infrastructure for proper taxation.”

The valuation rules for virtual assets also vary depending on how actively an asset is traded. For Bitcoin and other assets traded on NTS-designated exchanges, the value of a gift is calculated using the average price over the month before and the month after the transfer date.

For virtual assets that are rarely traded or are not listed on standard exchanges, the reported value is based on the daily average price on the date of the gift.

As South Korea moves toward broader monitoring of digital assets, the growing use of crypto gifts by families is likely to face greater scrutiny. The sharp rise in transfers to children highlights both the growing role of cryptocurrency in household wealth planning and the challenges facing tax authorities as they seek to bring digital assets under a more comprehensive reporting framework.

At the same time, cryptocurrency’s price volatility means that strategies designed to reduce tax exposure can carry financial risks of their own. A transfer made when prices are relatively low may remain below a gift-tax threshold, but subsequent price movements can materially change the value of the assets involved.