South Korea Eyes Legal Framework to Seize Private Crypto Wallets

The initiative, detailed in a paper published by National Tax Service officials in the Korea Institute of Criminology and Justice’s journal, targets the gap between exchange-held assets and private hardware wallets. While a 2025 Supreme Court ruling confirmed Bitcoin constitutes property subject to seizure, officials argue the ruling fails to provide a mechanism for securing assets when the suspect retains control of private keys.

Investigators contend that existing statutes, specifically Article 120, are fundamentally incompatible with blockchain transactions. Because digital assets cannot be physically secured, investigators fear suspects can easily bypass warrants by transferring funds to alternative addresses. To mitigate this, the proposal suggests warrants explicitly detail wallet addresses, specific asset types, and authorized transfer methods.

To prevent the risks associated with unilateral agency control, the paper recommends a system of court-supervised joint wallets. This model would require both judicial and investigative oversight, aiming to curb potential theft or mismanagement. The push for reform follows a February security lapse within the National Tax Service, where an exposed recovery phrase led to the loss of approximately $4.8 million in seized crypto. By codifying these procedures, the agency hopes to replace ad-hoc enforcement with a standardized, transparent custody process.