South Korea plans preemptive crypto account freezes to curb cash laundering, market manipulation, and unlawful fund transfers.
South Korean monetary authorities are shifting quick to vary how they police digital belongings.
Stories from 6 January point out that the Monetary Providers Fee (FSC) is weighing a significant coverage change.
This plan includes “preemptive” crypto account freezes, which might permit regulators to cease transactions the second they believe any worth manipulation.
At present, the regulation requires court docket warrants to dam belongings, however this delay typically offers criminals sufficient time to maneuver cash into non-public wallets or offshore accounts.
As a backside line, the FSC needs to shut this window.
Crypto Account Freezes And Inventory Guidelines
The proposed system borrows instantly from the Capital Markets Act.
Within the conventional inventory market, authorities can freeze accounts that they believe of unlawful brief gross sales or unfair buying and selling.
South Korea’s lengthy awaited crypto regulation (Digital Asset Primary Act) has been additional stalled as regulators mull over who can concern won-pegged stablecoins.
Financial institution of Korea is of the opinion that solely banks with 51% possession can concern stablecoins nevertheless the Monetary Providers… pic.twitter.com/Py12Hfp6zf
— Sapna Singh (@AdvSapna_) January 5, 2026
These guidelines have been up to date in April of final 12 months, and now, the FSC believes the crypto market wants the identical degree of safety. Traditionally, market manipulation typically occurs by wash buying and selling or excessive purchase orders.
These techniques create faux demand and unrealised income and suspects typically disguise these good points earlier than an precise probe even begins.
Stopping Funds Earlier than They Attain Non-public Wallets
The primary problem for the FSC is the character of blockchain know-how. Not like financial institution accounts, crypto wallets don’t all the time require a government to operate.
If a suspect strikes Bitcoin to a {hardware} machine, it turns into practically not possible to grab remotely.
The brand new improvement would goal centralised exchanges first and Digital Asset Service Suppliers (VASPs) must adjust to these freeze orders instantly.
This plan is a part of the second section of nationwide crypto laws, with the primary section targeted totally on defending customers. As such, this new section creates a framework for stablecoin guidelines and controlling market abuse.
Urgency Pushed by Latest Monetary Scandals
A number of main incidents have additionally pushed the federal government to behave. For instance, the 2022 Terra-LUNA collapse remains to be a recent reminiscence for a lot of Korean buyers.
That occasion uncovered huge gaps in market oversight.
Regulators have additionally noticed an increase in “smurfing” techniques, the place criminals break giant sums into tiny transfers. Often, transfers beneath 1 million gained (about $680) expertise much less strict guidelines, and the FIU reported greater than 36,000 suspicious transactions early final 12 months.
NEW: Terra Founder Do Kwon simply wrapped up his responsible plea in New York court docket to 2 counts of conspiracy and fraud
The plea deal units up Do Kwon on a path to be despatched again to Korea after what might be as little as 6 years
Here is the way it went down within the courtroom 🧵 pic.twitter.com/xLqxmxR6Zu
— Zack Guzmán ♻️ (@zGuz) August 12, 2025
Practically 90% of those have been linked to unlawful overseas remittance schemes, that are regionally generally known as “hwanchigi.” As such, the federal government needs to finish these loopholes by monitoring all actions, no matter dimension.
Associated Studying: South Korea FIU Fines Korbit $1.9 Million Over AML Violations
A Push for Monetary Alignment
This proposal is only one half of a bigger crackdown. South Korea needs crypto to satisfy bank-level requirements and the Nationwide Tax Service not too long ago warned that chilly wallets will not be secure from the regulation.
They now have the authority to go looking houses and seize offline storage units in tax instances.
The FSC can be exploring bank-level legal responsibility for exchanges. They need platforms to pay customers for losses from hacks or system failures.
This is able to apply even when the trade was circuitously negligent.
These steps present that the nation is shifting actively in direction of stopping hurt earlier than it occurs.