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South Korea proposes crypto seizure rules, exchanges get one week to respond
The Supreme Court’s draft Civil Execution Rules would take effect Oct. 1, with courts able to require custodians to disclose and handle frozen virtual assets within a compressed timeline.
South Korea is nearing an Aug. 11 deadline for public comments on proposed crypto seizure rules that would tighten how exchanges respond to civil debt enforcement orders. Under the amendments to the Supreme Court’s Civil Execution Rules, creditors could seek a standardized process to freeze, identify, and liquidate virtual assets tied to debtors.
If finalized on the current timetable, the rules are expected to take effect Oct. 1. That would give exchanges and other virtual asset service providers limited time after the consultation closes to prepare for a more formal role in civil enforcement.
The proposal also contemplates how seizures work when crypto is held through a custodian. A court could attach the debtor’s right to receive the assets, and once served, the provider would be barred from transferring the corresponding assets to the debtor, while the debtor would lose the ability to dispose of the claim.
After a creditor asks the court to compel disclosure, the exchange would have one week to say whether it recognizes the debtor’s claim, identify the type and quantity of assets, and disclose any competing seizures, provisional orders, or priority rights. The framework could have broad reach given South Korea’s retail-heavy crypto market, where 16.29 million people held accounts across the country’s five largest exchanges as of February 2025.
The proposal would also allow courts to assign frozen assets to creditors or order liquidation, with providers potentially carrying out sales or transferring crypto to an enforcement officer’s account for conversion into more liquid assets. CryptoSlate said the changes align with South Korea’s broader push to formalize crypto market rules, including user protections and tighter exchange registration and anti-money laundering requirements.