South Korea Weighs Rule Requiring Crypto Exchanges to Report Customer Assets Within Seven Days

South Korea is approaching an Aug. 11 deadline for public feedback on draft rules that would set a formal court-driven process for seizing crypto in civil debt enforcement, including a requirement for exchanges to disclose customer holdings within seven days of receiving a court order. The Supreme Court has proposed amendments to the Civil Execution Rules aimed at standardizing how creditors can freeze, identify, and liquidate virtual assets held by debtors. Under the current timetable, the revisions would take effect on Oct. 1, giving exchanges and other virtual asset service providers about seven weeks after the consultation window closes to prepare for a more defined role in civil collection cases. For crypto held through a custodian, the court could attach the debtor's right to receive the assets, rather than initially taking the coins themselves. Once the order is served, the provider would be prohibited from transferring the related assets to the debtor, and the debtor would lose the ability to dispose of the claim. Creditors could then petition the court to compel disclosure. The provider would have one week to state whether it recognizes the debtor's claim, specify the type and quantity of assets held, and report any competing seizures, provisional orders, or priority rights. The proposal could have wide impact in one of the world's most retail-driven crypto markets. As of February 2025, South Korea's five largest exchanges had 16.29 million account holders, about 32% of the population. That surpassed the roughly 14.2 million people who held domestic listed stocks at the end of 2024. Once assets are identified and frozen, courts could assign them to creditors or order liquidation. A virtual asset service provider could carry out the sale, or the crypto could be transferred to an enforcement officer's account or converted into more liquid assets before disposal. Enforcement is more challenging when a debtor holds crypto directly. While a court could prohibit disposal and order a transfer to an enforcement officer, the seizure would take effect only when the officer actually receives the assets, leaving control of private keys as a practical limitation. The draft also aligns with South Korea's broader push to formalize oversight of a market that has become increasingly mainstream. Regulators have introduced statutory protections for virtual asset users and are tightening exchange registration and anti-money laundering requirements, including plans to expand the travel rule and add controls around personal wallets and stablecoins. The proposed seizure framework would extend that regulatory buildout into civil debt collection. The rules would also apply to proceedings already underway when they take effect, making the period between the Aug. 11 comment deadline and the proposed Oct. 1 start date particularly relevant for exchanges preparing to handle court orders.