South Korea’s finance minister has promised reforms to tighten the way government agencies handle seized cryptocurrency, following a leak of digital asset information involving the National Tax Service.
Summary
- South Korea’s finance minister has announced a comprehensive audit of digital assets held by public institutions for confiscation and enforcement of tax compliance.
- The review follows a leak of National Tax Service data and previous incidents where police lost access to seized Bitcoin due to security failures.
- Authorities plan to strengthen digital asset security management and implement safeguards to prevent future breaches.
Seizure of Bitcoin under scrutiny as South Korea tightens controls on digital assets
In a statement posted on social media, the minister said the government will work with the Financial Services Commission and the Financial Supervisory Service to carry out a comprehensive audit of digital assets held by government agencies through law enforcement measures such as the arrest of tax evaders.
The review will examine the current state and management practices of those areas and introduce measures to prevent future incidents, including stronger controls for the security of digital assets.
“In conjunction with relevant bodies such as the Financial Services Commission and the Financial Supervision Service, the government will examine the current situation and procedures for managing digital assets owned and managed by the government and government agencies through seizure and other enforcement methods,” said Koo to X.
The minister clarified that the government does not invest or hold cryptocurrency beyond assets obtained through law enforcement procedures.
The move comes after a security lapse that raised concerns about how authorities are protecting seized crypto. South Korean police lost access to Bitcoin seized in 2021 after relying on a third-party custodian without control over private keys, exposing weaknesses in custody oversight.
The issue only came to light following an internal investigation, which sparked criticism of the police’s digital asset management practices.
Authorities later arrested two suspects accused of stealing Bitcoin from wallets linked to the seized assets, highlighting the risks to state-owned crypto holdings.
With the seizure of digital assets becoming increasingly common in tax enforcement and criminal investigations, the latest update reflects an effort to standardize child custody practices and strengthen accountability. Government audits are expected to examine storage mechanisms, access controls, and interagency communications to reduce operational risks associated with handling volatile and complex technical assets.
The finance minister said the changes will come into effect as soon as the review is completed, aimed at restoring confidence in the government’s ability to securely manage seized digital assets.
