South Korea’s top court expands bitcoin seizure rules

South Korea’s Supreme Court has issued draft civil enforcement rules that would allow courts to freeze, seize and liquidate bitcoin and other virtual assets in civil litigation. Public comment on the draft is open until Aug. 11, and the court plans to implement the rules in October.

Under the draft, compulsory execution against a debtor’s virtual currency would begin with a court-issued attachment order. The order would bar the debtor from disposing of the assets and require their transfer to a court enforcement officer. The attachment would take effect when the officer receives the assets into custody.

Creditors could request either a court-ordered transfer of the seized assets to themselves at a court-determined valuation or a sale order to convert the tokens into cash. If a sale order is issued, a bailiff may move the cryptocurrency into a dedicated account at a certified virtual asset service provider for liquidation or authorize the provider to sell the assets directly.

The rules would allow courts to exchange seized tokens for more liquid cryptocurrencies to simplify conversion to cash. To prevent debtors from moving or selling coins during litigation, the draft specifies preservation measures such as provisional attachments and injunctions to freeze electronic wallets.

The National Court Administration is collecting public and legal feedback on the draft until Aug. 11. The draft aims to standardize enforcement across court levels and reduce cases where debtors transfer digital assets to avoid satisfying judgments. The proposal grants explicit authority to enforcement officers and bailiffs to handle seized tokens and to route assets through certified providers subject to regulation.

The draft builds on the Virtual Asset User Protection Act that took effect in July 2024. That law requires virtual asset service providers to segregate user funds, keep at least 80% of assets in cold storage and strengthen monitoring of unfair trading. The Supreme Court’s proposal relies on the regulated infrastructure created by that law to carry out court-ordered liquidations and transfers.

In a statement, the Supreme Court wrote the rules are needed “to establish civil enforcement procedures that align with the legal nature and transaction structure of virtual assets” and to “secure predictability and legal stability” in civil disputes.