South Korea to Classify Seized, Donated Bitcoin as State Assets and Auction Them Promptly

South Korea plans to legally classify virtual assets such as Bitcoin acquired through criminal asset forfeiture or donations as state assets and, in principle, auction them off immediately after taking possession.

The government unveiled the plan on Aug. 6 at a meeting of the emergency economic headquarters and ministers overseeing the economy and structural reform. The measure was included in its "K-Asset Innovation Project," a broader overhaul of the state asset management system.

Under the plan, the government will fully revise the current State Property Act into a Framework Act on State Assets. The new law would expand the existing real estate-centered management system to cover virtual assets, intellectual property rights, stocks and equity stakes. A draft bill is to be prepared by the end of this year.

The revision would also spell out in law the basis for managing and disposing of virtual assets acquired by the state through criminal asset forfeiture or donations. The government's virtual-asset holdings totaled about 78 billion won ($56.3 million) as of April and have so far been managed under internal guidelines.

The government also plans to include legal grounds for custody through private virtual-asset exchanges and for recovering virtual assets held on overseas exchanges and in digital wallets.

Virtual assets acquired by the state would, in principle, be put up for auction immediately after acquisition. Officials are also reviewing whether to allow split auctions when large sales could affect the market.