South Korea’s National Police Agency (KNPA) has prepared a draft directive on handling seized cryptocurrencies, including privacy-focused tokens, as it moves to standardize storage and management of digital-asset evidence.
According to local outlet Asiae, the KNPA’s draft defines compliance requirements for every stage of crypto seizure. It sets out procedures for managing software wallets and privacy-centric assets and stresses that authorities must handle wallet addresses and private keys rather than treating crypto as physical items stored in warehouses. A police spokesperson told Asiae that evolving investigative methods require systematic guidelines and better support for officers in the field.
The initiative follows several cases where seized digital assets were lost or mishandled while in government custody, prompting closer scrutiny of asset-management practices. Cointelegraph requested comments from the National Police Agency and the Supreme Prosecutors’ Office but had not received a response by publication.
Selection of private custody provider planned for H1 2026
Asiae reports the KNPA aims to appoint a private custody provider by the first half of 2026. Three bidding attempts in 2025 failed after applicants were judged unsuitable, and budget limits have been a constraint: the police allocated 83 million won (about $55,600) for handling seized crypto despite the high risks involved.
Based on cases with finalized court rulings, Asiae estimates the police seized about 54.5 billion won (roughly $36.5 million) in crypto over the past five years, including roughly 50.7 billion won in Bitcoin and 1.8 billion won in Ether.
Phishing incident highlights custody risks
Heightened scrutiny and the new draft follow a phishing incident affecting government-held Bitcoin. On Jan. 23, officials at the Gwangju District Prosecutors’ Office discovered during a routine check that roughly 320 Bitcoin had gone missing from prosecutors’ custody after an August 2025 investigation. Prosecutors said the unknown hacker unexpectedly returned the missing BTC on Feb. 19. On March 10, they reported having sold the recovered coins and transferring about 31.59 billion won (around $21.5 million) to the national treasury.
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