Cryptocurrency held on overseas exchanges is difficult to verify during asset reviews for debt restructuring applications in South Korea, officials said. The Credit Counseling and Recovery Service counts an applicant's cryptocurrency as an asset, but says holdings on overseas exchanges cannot be traced and are hard to identify unless the applicant discloses them.
Current debt restructuring rules at the service do not list cryptocurrency as a separate asset category, according to financial industry sources on the 2nd. Applicants typically report their assets and debts, and the service conducts its asset review based on those filings.
The problem is that the service depends heavily on applicants' own statements when checking whether they hold cryptocurrency. For domestic exchanges, which route transactions through Korean bank accounts, the service can demand balance certificates or trace the funds. For overseas exchanges, it has no such means. Inquiries from users holding cryptocurrency on overseas exchanges have been posted on the service's official online community, and confusion has spread after some members replied that overseas exchanges are unlikely to be checked.
"It is true that there is no written procedure for separately verifying cryptocurrency on overseas exchanges at the application stage," an official at the service said. "If applicants do not disclose it, verification is realistically difficult."
The service is not alone. The New Start Fund, operated by the Korea Asset Management Corporation, also collects balance certificates for cryptocurrency held on domestic exchanges but has not disclosed its verification procedures for overseas exchanges or private wallets. It says it cannot reveal details because the information could be exploited to hide assets.
Industry officials worry that cryptocurrency held on overseas exchanges or in private wallets could become a blind spot in asset verification, given that it is hard to check directly and that confirming ownership relies largely on applicants' statements. "This could easily turn into a blind spot," an official in the financial sector said. "Verification during the debt restructuring application process needs to be strengthened further."
