South Korea’s National Tax Service (NTS) is moving to hand off seized virtual assets to private custody providers after a recent security lapse exposed the risks of doing it in-house.
Korea Tax Authority Fast-Tracks Crypto Custody SelectionOfficials are now reviewing a plan to entrust seized holdings to private custodians, while building out detailed selection criteria that will determine who gets the job. The goal is straightforward—secure the assets, reduce operational risk, and avoid becoming a headline for the wrong reasons again.
As far as this news is concerned, an industry source familiar with the discussions said the process is expected to be selective, noting that “not every custody provider can be entrusted with this,” particularly given the sensitivity of government-seized assets and the reputational stakes involved.
The National Tax Service plans to begin the selection process once those criteria are finalized, with urgency driving the timeline. Zdnet Korea reports that officials are aiming to complete both the decision to use custody services and the selection of a provider within the first half of the year.
Ko Young-il, who leads the task force, said the approach mirrors practices already adopted in developed markets, signaling that South Korea is aligning with international standards rather than improvising its own playbook.
In parallel, officials are preparing to launch a dedicated Digital Asset General Division, which would centralize oversight of crypto-related matters that are currently spread across multiple departments. Details on its structure and timeline will be finalized in consultation with the Ministry of the Interior and Safety.
An NTS official said the fragmentation reflects how new the asset class still is within government operations, adding that an integrated system is now seen as necessary to manage the growing role of digital assets in tax enforcement.
FAQ Why is South Korea’s National Tax Service using crypto custody providers? To improve security and prevent theft after a recent incident involving exposed mnemonic codes. When will the NTS select a custody provider? The agency aims to finalize its decision and select a provider within the first half of 2026. What criteria will be used to choose a crypto custodian? Security standards, company size, and insurance compliance under the Virtual Asset User Protection Act. What changes are being made to manage seized crypto assets? The NTS is creating a task force, updating manuals, expanding training, and planning a dedicated digital asset division.
