South Korea’s National Police Agency (KNPA) has officially introduced new guidelines to create a unified framework for the custody and administration of seized digital assets. According to the latest reports, the regulatory agency has decided to introduce new measures following multiple security lapses across the country. Among the reported lapses were incidents of Bitcoin lost due to custody shortcomings. The instructions proposed by the KNPA will include procedures for managing wallet addresses, software wallets, and private keys. Specific provisions for ‘software wallet regulations’ were also included for handling privacy-focused assets that cannot be easily stored in hardware wallets.
Korean local media outlet Asiae reported on Tuesday that the police had established guidelines regarding “dark coins” for the first time while overhauling their management system, following successive losses of seized virtual assets by government and investigative agencies. The report stated that, unlike ordinary virtual assets, where transaction records can be verified by third parties, dark coins are highly anonymous and have been used in crimes such as the Nth Room case.
The news report confirms that the agency has recently completed the drafting of a directive specifying compliance requirements for each stage of virtual asset seizure. It further added that management measures for software wallets (hot wallets) are necessary for handling seized dark coins. Unlike conventional virtual assets stored in hardware wallets (cold wallets), such as USB drives, dark coins require separate wallets due to their design, which makes transaction tracking more difficult.
According to the report, the estimated value of virtual assets seized by the police over the past five years is around 54.5 billion, including 50.7 billion won in Bitcoin (BTC) and about 1.8 billion won in Ethereum (ETH). These figures are only estimates, and the actual valuation of seized assets could be higher due to the high volatility of virtual asset prices.
In response, a police spokesperson commented that in the past, seized items had been stored in warehouses, but authorities are now in an era where wallet addresses and private keys must be managed. The spokesperson added that as the investigative paradigm has shifted, field investigators are seeking systematic guidelines along with corresponding support.
Finance Minister Vows Stronger Oversight of Seized Cryptocurrencies Amid Security Failures
On March 1, 2026, Sunday, South Korea’s finance minister Koo Yun-cheol officially made a statement through his X account acknowledging the security lapses in seized cryptocurrency management. Koo Yun-cheol wrote in a social media post that, in connection with the recent digital asset information leak incident involving the National Tax Service, the government would conduct an inspection of the current status and management practices of digital assets held by public institutions.
He stated that the review would be carried out in collaboration with relevant agencies such as the Financial Services Commission and the Financial Supervisory Service, focusing on assets obtained through enforcement measures like seizure from delinquents. He added that the government would promptly implement measures to prevent recurrence, including strengthening digital asset security management.
He further clarified that the government does not hold digital assets except those acquired through legal enforcement processes such as seizure.
The management of these stored wallets is the key challenge ahead of the officials. Hwang Seok-jin, a professor at Dongguk University’s Graduate School of International Information Security, advised a method of “Integrated management”. According to him, managing wallets individually by each agency could lead to security gaps, and in the case of mnemonic codes, exposure of a wallet could allow private keys to be inferred and hacked through transaction records. He added that integrated management should be entrusted to government-led specialized trustees.
