South Korean police set rules for seizure of cryptocurrencies after custody incidents
In a move that could influence global regulators, South Korean police announced last week the creation of a new set of rules for the seizure of cryptocurrencies.Critical failures in private custody providers, which resulted in the loss of millions of dollars in digital assets during criminal investigations in 2025.
Second report of the agencyAsiaeThe South Korean national police plan to select one by the middle of 2026.Private provider specializing in custody of cryptocurrenciesTo act as an official partner in seizure operations.The measure seeks to prevent the loss of assets seized in investigations — such as in cases of money laundering or fraud — due to technical problems or the insolvency of current custodians.
The announcement comes at a time when the global cryptocurrency market is facing increasing regulatory pressure. Countries like Brazil are also discussing stricter standards for the custody of digital assets, especially after incidents such as the collapse of the cryptocurrency market.FTX in 2022South Korea, one of the most active markets in Asia, serves asRegulatory Laboratorygood practices that can be adopted internationally.
What caused the change in South Korea?
In 2025, two major South Korean custody providers faced crises that resulted in partial or total loss of customer funds. In the first case, a regional exchange had its cold wallet reserves compromised due to aThe Social Engineering AttackThe disappearance of about$45 million in Bitcoin and EthereumIn another incident, an institutional custodian went bankrupt after investing in DeFi projects without proper supervision, causing damage to more than 12,000 users.
These episodes exposed a gap in South Korean legislation:There were no clear rules on how to deal with crypto assets seized in police operations.Until then, security forces relied on improvised solutions, such as the immediate sale of assets to avoid losses from volatility or hacking.Store and manage assets safelyuntil the completion of the trial.
The South Korean government had already demonstrated concern about the security of digital assets.The Law of Virtual Assets, which requires registered exchanges to adopt strict security measures, includingIndependent and secure audits against hackingThe new rule for seizures reinforces this commitment by aligning it with international standards such as theFATF (Financial Action Group).
What is the impact on the Brazilian cryptocurrency market?
Although South Korea and Brazil have different realities, the South Korean measure can serve as aReference to Brazilian regulatorsThe Central Bank of Brazil (BC) and the Securities Commission (CVM) have been discussing, since 2023, the creation of specific standards for the custody of cryptocurrencies.Provisional measure 1,171/2023, which regulates the issuance of stablecoins in the country, already signals a trend of greater control over service providers.
For Brazilian investors, South Korean news reinforces the importance of choosingExchanges and custodians with international certificationsJust like the daCustody Standards Association (CSA)orby ISO 27001In addition, the case highlights the need for Brazil to advance its own regulation, ensuring that the assets of Brazilian customers are protected in case of judicial seizure.
Another important point is theAdoption of decentralized custody technologiesCompanies such as theFireblocksand aLedger Vault— already operating in Brazil — offer solutions that combine physical and digital security, with multi-signature and distributed cold storage. These innovations can become standard in the global market, especially in countries with high incidence of fraud and money laundering.
What to Expect for the Future of Crypto Regulation in Brazil?
The debate over custody in Brazil gained breath after theOpening proceedings against unregulated exchangesThe Federal Revenue already requires that all transactions with cryptocurrencies be declared, and the BC is considering the creation of a new cryptocurrency.The Sandbox RegulationTesting new financial technologies.
Experts heard by the report point out that Brazil can benefit from South Korean lessons.Safety and regulation are not enemies of innovation“The tax lawyer said.by Rafael Lemos“By setting clear rules, the country attracts more institutional investors and reduces the risk of losses for consumers.”
Meanwhile, in the Brazilian market, the demand for safe custody services continues to grow.Brazilian Association of Crypto Economy (ABCripto)The volume of bitcoin transactions in Brazil has increased.180% between 2023 and 2025, driven by retail investors and companies seeking to diversify their reserves.
South Korea, with its pragmatic approach, may be paving the way to a new global standard. While Brazil is still discussing its next steps, one thing is certain:The security of digital assets has never been so discussed — and charged — by regulators and investors..