South Korea Supreme Court sets October 1 rules for virtual asset seizure

South Korea’s Supreme Court has proposed amendments to the Rules of Civil Execution that would formalize how digital assets are frozen, transferred and sold in civil debt enforcement, with public comments open until Aug. 11 and the revised rules scheduled to take effect on Oct. 1. Published on July 2, the draft treats virtual assets as intangible property with economic value and sets out procedures from seizure through liquidation for both directly held crypto and contractual claims over assets held on centralized exchanges. Once a court orders seizure, debtors would be barred from disposing of the assets, while exchanges holding the crypto would be required to hand it over to an enforcement officer for the seizure to take legal effect. Creditors could then either receive the crypto directly or seek court approval to liquidate it through a virtual asset service provider. The proposal also addresses illiquid tokens by allowing enforcement officers to convert them into more marketable assets or into currency or withdrawal claims before sale. Separate preservation measures would let creditors seek provisional sequestration and disposal bans before litigation to prevent debtors from moving digital assets. The move builds on South Korea’s broader push to integrate crypto into its legal system, including the Virtual Asset User Protection Act that took effect in July 2024 and a December 2025 Supreme Court ruling that 55.6 Bitcoin held on an exchange could be confiscated as property in a money laundering case. The rules are especially significant for exchange-held assets, where courts can compel custodians to comply, while self-custodied holdings remain harder to enforce against.