New cryptocurrency seizure protocols developed by South Korean police following custody failures: Report
According to Asiae, a local news source, national police authorities are targeting the first half of 2026 to finalize the selection of a private custody service provider.
The Korea National Police Agency (KNPA) has developed new protocols for the management of confiscated digital currencies, including tokens designed for privacy protection, according to reports. This initiative represents a broader effort by South Korean authorities to establish standardized procedures for storing and managing digital asset evidence.
Asiae, a domestic media publication, reported that the KNPA has finalized a preliminary directive that specifies compliance obligations for every phase of cryptocurrency confiscation. These protocols encompass provisions for overseeing software wallets required for handling digital currencies and privacy-oriented tokens.
Speaking to Asiae, a representative from the police agency explained that evolving investigative approaches require field officers to have structured guidelines supported by adequate resources. "Previously, confiscated property was kept in storage facilities. Today we are responsible for managing wallet addresses and private keys," the representative stated.
This initiative comes in response to multiple recent incidents where confiscated digital currencies were either lost or improperly handled during government custody, leading to increased examination of how authorities manage these assets.
Cointelegraph contacted both the Korea National Police Agency and the Supreme Prosecutors' Office requesting statements, though neither organization had provided a response at the time of publication.
KNPA to select custody provider to handle seized crypto
Asiae's report indicates that the KNPA intends to complete the appointment of a private custody service provider by the first half of 2026. Throughout 2025, three distinct procurement processes aimed at identifying a custody provider were unsuccessful, as companies that submitted applications failed to meet the necessary qualifications.
The report from Asiae further highlighted that financial limitations presented significant obstacles. According to the publication, police authorities designated merely 83 million won (approximately $55,600) for managing confiscated cryptocurrency holdings, an amount considered inadequate given the associated risks.
Drawing from cases where court decisions have been rendered final, Asiae calculated that the total value of digital currencies confiscated by police authorities over the previous five years amounts to 54.5 billion won (approximately $36.5 million).
This figure comprises roughly 50.7 billion won worth of Bitcoin (BTC) along with 1.8 billion won in Ether (ETH).
Phishing incident highlights crypto custody risks
The newly drafted protocols for overseeing seized digital currencies arrive amid intensified examination of custody procedures following a phishing attack that targeted government-controlled Bitcoin holdings earlier in the year.
On Jan. 23, personnel from the Gwangju District Prosecutors' Office identified during a standard audit that roughly 320 Bitcoin had disappeared from prosecutorial custody while under investigation in August 2025.
On Feb. 19, prosecutors announced that they had surprisingly regained possession of the missing BTC following the unidentified hacker's decision to return the stolen digital currency.
On March 10, the prosecutors announced that they had liquidated the recovered assets and deposited approximately 31.59 billion Korean won (roughly $21.5 million) into the national treasury.