South Korea Proposes Procedures to Seize Self-Custodied Crypto

South Korea's National Tax Service helped draft a research paper that recommends new criminal-procedure rules for seizing cryptocurrencies held in self-custodied wallets. The proposal, co-authored by investigation team leader Jang Hee-won and three other researchers, argues that current laws don't cover the practical and legal challenges of taking control of assets controlled through private keys or recovery phrases.

The paper is not law. If adopted, the framework would require investigators to document wallet addresses, asset types, quantities, transfer methods and custody arrangements. Courts would take a larger role in overseeing seized crypto rather than leaving custody solely to investigative agencies. Supporters say joint custody could cut operational risks and improve accountability during criminal proceedings.

The recommendation follows an incident earlier this year that exposed weaknesses in how authorities handle seized digital assets. South Korea's tax office accidentally published a recovery phrase for a confiscated wallet in a public document. About 4 million PRTG tokens, then worth roughly $4.8 million, were transferred out of the wallet before investigators could secure it.