It is impossible to track all blockchain transactions. How did the Korean government know who traded it? Can you tell me?
It has not directly something to do with the blockchain itself, but more the trades happening on-exchange. If user x has a balance of $1000 for example, and he trades his way up all the way till $2000 for example, it means that he made $1000 in profits, and that's something that person needs to pay tax over. It will be a major hassle for the government to exactly calculate what initial deposits resulted in profit, and what not, and especially when it comes to high volume day traders, but they apparantly think they can do it. If this turns out to be a success for the governments, then it may end up resulting in a domino effect making nearly all governments do so. It's the perfect way for governments to make people pay tax, because if the people themselves don't do it out of free will, the government will come and get it from them.