South Korea’s National Police Agency (KNPA) has drafted guidelines for handling seized cryptocurrencies, including privacy-focused tokens, as authorities move to standardize storage and management of digital-asset evidence.
According to local outlet Asiae, the KNPA completed a draft directive that sets compliance requirements for each stage of crypto seizure. The directive covers procedures for managing software wallets and handling privacy-focused assets, and emphasizes the need to manage wallet addresses and private keys rather than treating seized crypto like items stored in warehouses. A police spokesperson told Asiae that changing investigative paradigms require systematic guidelines and appropriate support for field investigators.
The move follows several incidents in which seized cryptocurrencies were lost or mishandled while in government custody, prompting closer scrutiny of asset-management practices. Cointelegraph sought comment from the National Police Agency and the Supreme Prosecutors’ Office but had not received a response by publication.
KNPA to select private custody provider in H1 2026
Asiae reported the KNPA plans to finalize a private custody provider by the first half of 2026. Three bidding attempts in 2025 failed after applicant firms were deemed unsuitable. Budget constraints have also been a challenge: the police allocated 83 million won (about $55,600) for handling seized crypto assets despite the associated risks.
Based on cases with finalized court rulings, Asiae estimated police seized crypto worth about 54.5 billion won (roughly $36.5 million) over the past five years, including about 50.7 billion won in Bitcoin and 1.8 billion won in Ether.
Phishing incident underscores custody risks
Heightened scrutiny and the new draft follow a phishing incident involving government-held Bitcoin. On Jan. 23, Gwangju District Prosecutors’ Office officials discovered during a routine inspection that around 320 Bitcoin had gone missing from prosecutors’ custody after an August 2025 investigation. Prosecutors said the missing BTC was unexpectedly returned by the unknown hacker on Feb. 19. On March 10, prosecutors reported they had sold the recovered assets and transferred roughly 31.59 billion won (about $21.5 million) to the national treasury.
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