"Police to entrust seized virtual assets to external custodians…introduce rules for monthly inspections and management"

South Korea’s police are moving to place virtual assets (cryptocurrencies) such as bitcoin (BTC), secured during investigations, in the custody of specialist firms. The initiative is aimed at overhauling the management system following a loss incident.

According to a “Plan to Improve the Management System for Seized Virtual Assets” submitted by the National Police Agency to Rep. Chae Hyun-il of the Democratic Party of Korea on the 24th, police are expected to build a framework to manage seized virtual assets in stages. The plan breaks down the entire process—preparation, seizure, storage and transfer to prosecutors—while clearly assigning management responsibilities not only to investigators but also to evidence custodians and heads of investigation support teams.

A regular inspection regime will also be introduced. For seized virtual assets, which previously had no separate inspection cycle, police are reportedly planning to compile and manage monthly figures such as custody status and disposition results.

In addition, police are pushing a system to entrust custody to “virtual asset service providers” capable of professionally managing such assets. The related budget has already been secured, and the goal is to complete the rollout within the year. Through outsourced custody, police expect to improve management efficiency and reduce the burden of fees incurred during transfers.

In the first half of this year, police will also newly establish “Rules on the Seizure and Custody of Virtual Assets.” They plan to enact administrative rules that spell out step-by-step procedures—including deposit/withdrawal suspension, seizure and custody, transfer to prosecutors, and return/provisional return—and to produce and distribute manuals for investigators in the field.

Meanwhile, the overhaul was prepared after a recent bitcoin loss case at the Seoul Gangnam Police Station. Police previously faced controversy over lax management after an internal inspection found that 22 bitcoins voluntarily submitted in late 2021 had been transferred to an external electronic wallet.