"Police draft dark-coin management guidelines…overhauling the custody framework for seized cryptoassets"

Police are reported to have prepared an initial draft to institutionalize management standards for “dark coins,” aiming to reduce confusion during the seizure and storage of cryptoassets.

According to industry sources on the 17th, the Korean National Police Agency (KNPA) recently completed the structure of a draft directive outlining compliance requirements for each stage of cryptoasset seizure. The draft is said to include, for the first time, operating standards for software wallets (hot wallets) to manage seized dark coins.

A dark coin is a private coin designed to conceal sender and recipient information as well as transaction amounts, unlike general cryptoassets whose transaction histories are publicly disclosed. This has led to repeated cases of their use in money laundering or the movement of criminal proceeds.

Previously, the principle was for investigative authorities to store seized cryptoassets in hardware wallets (cold wallets).

However, dark coins are often structured so that wallets can be created only within a separate dedicated software environment, and their private keys are also typically stored not on physical devices but in the form of files or strings. For this reason, in practice, software wallets have effectively been used as an exception in the field.

Through this draft, police plan to bring this practice into the formal system and establish a separate management framework.

Meanwhile, the KNPA plans to complete the selection of a private custody provider for the storage of seized cryptoassets within the first half of the year.