Ultimate Guide: South Korea Considers Pre-emptive Crypto Account Freezes, Report Says
The proposal highlights South Korea’s push to align crypto oversight with securities markets, raising stakes for exchanges and traders alike.
South Korea’s financial authorities are reportedly weighing whether to allow regulators to preemptively freeze crypto accounts suspected of price manipulation.
The Financial Services Commission (FSC) is reviewing the introduction of a payment suspension system that would block transactions before suspects launder potentially illicit gains, local outlet Newsis reported Tuesday.
The measure would mirror tools already used in the country’s stock market, where authorities can freeze accounts suspected of manipulation before profits are cashed out.
The nation’s first phase of crypto legislation focused on user protection, while its second phase is expected to establish a broader framework that includes stablecoin rules and stricter controls on market abuse, though the proposals have yet to be formally introduced.
Under the current framework, authorities seeking to freeze assets linked to crypto manipulation are delayed by court warrants, giving suspects more time to conceal their funds.
According to the FSC, manipulation tactics such as front-running, automated wash trading and high buy orders can generate large unrealized profits that can quickly disappear. The market watchdog argued for earlier intervention to equip authorities with the tools to respond to such illicit activities.
South Korea’s amendments to its Capital Markets Act went into effect in April 2025 to introduce account freezes on those suspected of unfair trading or illegal short sales. The FSC reportedly discussed extending such measures to crypto during a closed-door meeting in November, while reviewing the first price manipulation case under amended rules.
Regulators said crypto markets warrant stronger tools, given the ease with which assets can be transferred into private wallets.
Related: South Korea delays crypto bill over stablecoin oversight concerns: Report
Source: CoinTelegraph
