The Republic of Korea is in the process of evaluating the amendments to the Criminal Procedure Code to establish a clearer legal basis for the seizure of secured and encrypted assets held in trust by law enforcement authorities. It was suggested that existing rules could cover exchange-held assets, but that there was still a lack of enforceable programme design for wallets directly controlled by individuals through private keys.
According to a paper published in June in Korea ' s Criminal Policy Study, 4 officials of the Korean State Tax Office proposed relevant amendments, including the head of the investigation team, Jang Hee-won. The focus of the article is on the wallet, including the hardware wallet, that the individual holds directly the private key, rather than on assets in an exchange or other third-party hosting account.
The current law does not cover the private key wallet
The paper mentioned that the Supreme Court of Korea had ruled in 2025 on the seizure of bitcoin in the wallet of the exchange, finding that the investigative body ' s practice was lawful. The decision confirmed that bitcoin could be considered as property to be seized in a criminal investigation, but did not indicate how the seizure of the assets from the safe wallet should be carried out.
The researchers note that, unlike traditional property, such assets cannot be controlled by “real possession”. Even when investigators obtain a suspect ' s private key or access certificate, the holder may retain a backup and transfer the asset before law enforcement is completed.
They further submit that the provisions of article 120 of the Korean Criminal Procedure Code concerning the execution of search and seizure orders were not originally designed for block chain assets. Transferring an encrypted asset from one address to another would also be different from seizing or preserving physical property. The current provisions do not explicitly include enforcement elements such as the type of asset, wallet address, mode of transfer and custody arrangements.
Proposal requires an address and transfer mode
To fill this gap, it was suggested that separate seizure rules be established for self-hosted encrypted assets. According to the proposal, if the private key is under the control of the suspect or the owner, the search and seizure order shall clearly state the type, quantity, address of the seized wallet, address of receipt, means of transfer and subsequent custody procedure.
The authors also suggest that seized assets should not be placed directly in the custody of a purse under the control of a single investigating authority, but rather that the wallet, which is managed jointly by the court and the investigating authority, should be used to reduce the risk of misappropriation and misuse. If it is not possible to transfer the wallet immediately and the suspect has the possibility of transferring the funds, the assets may also be transferred to a court-designated address on an interim basis.
There was a security error earlier this year.
The paper concluded by arguing that legislation should make the conditions for the transfer of wallets, requirements for seizure orders, hosting arrangements and management processes more specific, so as to prevent seized assets from falling entirely under the control of a single law enforcement authority.
This discussion was also related to a security incident earlier this year at the Korea IRS. Previously, the agency had unexpectedly exposed the wallet restoration aid in an official press release, and an unauthorized third party subsequently transferred some $4.8 million of encrypted assets.
Following the incident, the Korea IRS has established a special working group to reassess the seizure, custody and disposal process and to study the introduction of private encrypted hosting services to enhance the security of the custody of assets.