- South Korea seeks authorized authority to grab self-custodied crypto via up to date felony procedures.
- Proposed warrants should element pockets addresses, asset quantities, transfers, and safe custody preparations.
- Court docket-supervised joint wallets might cut back theft dangers whereas enhancing seized crypto asset safety.
South Korean tax officers have proposed adjustments to the nation’s felony regulation to determine clear procedures for seizing self-custodied cryptocurrency wallets throughout investigations. The proposal goals to handle authorized gaps surrounding digital belongings managed straight via non-public keys whereas introducing stricter warrant necessities and court-supervised custody measures.
Proposal Targets Authorized Gaps in Self-Custodied Crypto Seizures
Officers from South Korea’s Nationwide Tax Service (NTS) have referred to as for amendments to the Prison Process Act to help the lawful seizure of self-custodied digital belongings. The proposal was outlined in a analysis paper revealed within the June version of Prison Coverage Analysis, a journal of the Korea Institute of Criminology and Justice.
The paper was authored by 4 officers, together with NTS investigation workforce chief Jang Hee-won. It argues that current felony procedures have been designed for bodily property and don’t adequately tackle blockchain-based belongings managed via non-public keys.
Self-custodied cryptocurrencies differ from belongings held on centralized exchanges as a result of house owners retain unique management over their wallets.
{Hardware} wallets and software program wallets are frequent examples. Consequently, investigators can’t merely freeze or seize these belongings via an trade.
The authors referenced South Korea’s Supreme Court docket Choice 2025Mo45, issued in December 2025, which dominated that authorities lawfully seized Bitcoin held in trade wallets.
Nevertheless, they said that the ruling didn’t set up sensible procedures for confiscating cryptocurrencies saved in private wallets.
In line with the paper, merely acquiring a personal key might not assure management over digital belongings as a result of pockets house owners might possess duplicate entry credentials.
Consequently, investigators might wrestle to stop suspects from transferring funds earlier than authorities safe them.
The researchers additionally argued that Article 120 of the Prison Process Act lacks particular guidelines protecting pockets addresses, switch procedures, storage strategies, and custody preparations for blockchain belongings.
Officers Suggest Court docket-Supervised Crypto Custody
To shut these authorized gaps, the paper recommends creating devoted provisions governing the execution of seizures involving self-custodied cryptocurrencies.
Below the proposal, warrants would wish to specify the sort and amount of digital belongings, verified pockets addresses, vacation spot addresses, switch strategies, and post-transfer storage procedures at any time when non-public keys stay underneath a suspect’s management.
The researchers additionally proposed transferring seized belongings into wallets collectively managed by courts and investigative businesses as a substitute of addresses managed by a single authority. They argued this strategy would cut back dangers of theft, unauthorized entry, and misuse.
Moreover, courts might authorize momentary transfers to designated addresses at any time when instant motion into joint custody proves impractical or investigators imagine suspects might shortly eliminate their belongings.
The suggestions comply with broader efforts by South Korean authorities to strengthen digital asset custody procedures after a February safety incident uncovered a pockets restoration phrase in an official authorities launch.
The breach resulted in unauthorized transfers of roughly $4.8 million in seized cryptocurrency, prompting the NTS to evaluate custody practices and take into account stronger authorized safeguards for future investigations.