South Korea is presently in the process of drafting and finalizing its crypto regulations. Among other potential guardrails, Seoul is mulling whether regulators must be permitted to freeze crypto accounts on the basis of suspicions. If approved, the move would be intended to identify accounts engaged in price manipulation tactics.
South Korea’s Financial Services Commission (FSC) is overseeing the formulation of the crypto regulations. It is looking to create a system that would freeze payments to and from crypto accounts that hold, deposit, or withdraw suspiciously acquired assets or gains, local publication Newsis reported on Tuesday.
The aim is to prevent instances of money laundering via crypto. Since crypto transactions can be processed anonymously, their misuse by criminals to fly under the radar has been a matter of concern for governments around the world. South Korea is aiming at blocking any attempt at money laundering at the initiation itself.
South Korea already deploys a similar detect and block mechanism on stock market accounts – preventing notorious actors from cashing-out profits.
The topic has been making it to the discussion table since November last year. The FSC has reportedly also proposed legal consequences against those whose crypto accounts are flagged and frozen frozen.
Presently, South Korean authorities looking to freeze assets linked to crypto manipulation are delayed because of the requirement of court approvals and warrants. This ends up giving suspects a bigger window to hide or launder their funds.
South Korean lawmakers believe that crypto market requires stronger oversight at this point given that P2P transfers are instant, even cross-border, and largely private without the involvement of any intermediaries.
The government there has already established a virtual assets task force to expediate the process of drafting national crypto rules.
The Asian nation expects to finalize its crypto laws before the end of 2026, reports citing financial officials claimed last week.