The Supreme Court of South Korea has presented an update to civil execution rules that establishes specific procedures to seize, freeze, and sell cryptocurrencies, including Bitcoin, in court proceedings. The proposal aims to standardize the actions of the courts and prevent debtors from using digital assets to avoid complying with court decisions.
Under the new rules, execution over cryptocurrencies will begin with the issuance of a court order for attachment. From that moment on, the debtor is prevented from moving or transferring the assets, which must be delivered directly to a court officer responsible for custody. The attachment will take effect once the assets are officially received by the judicial agent.
The proposal also defines how the seized cryptocurrencies may be converted into cash to satisfy credits recognized by the courts. Among the alternatives provided is the issuance of a "transfer order," allowing the assets to be delivered directly to the creditor based on an assessment determined by the court.
Another option will be the issuance of a "sale order." In that case, the court officer may transfer the cryptocurrencies to a specific account in an authorized virtual asset platform to carry out the settlement, or require that the certified provider itself execute the sale of the digital assets.
In addition, the Supreme Court provides mechanisms to facilitate asset conversion. Courts may authorize the exchange of tokens with lower liquidity for more actively traded cryptocurrencies before the sale, making the settlement process more efficient.
The changes also include preventive measures to prevent debtors from moving their assets during the proceedings. Among them are provisional attachments and court orders to freeze digital wallets until the disputes are concluded.
The National Courts Administration said it will receive suggestions from society and experts on the amendment text until August 11. The expectation is that the new rules will officially take effect in October.
“It is necessary to establish civil execution procedures that align with the legal nature and structure of virtual asset transactions,” the Supreme Court said, adding that the rules were designed to “ensure predictability and legal stability” in civil disputes.
The update complements the Virtual Asset User Protection Act, in force since July 2024. The legislation already required that companies in the sector separate client resources, keep a large portion of the assets in cold storage, and adopt controls against irregular practices.
With the new regulation, the infrastructure created by the 2024 legislation will also be used for the execution of court decisions involving Bitcoin and other cryptocurrencies, providing clearer rules for attachments, freezes, and the settlement of digital assets in civil disputes.