South Korea’s National Tax Service seeks private custody for seized crypto after wallet exposure. Safety and security are top priorities.
South Korea’s National Tax Service (NTS) is planning to use private companies to safely store seized cryptocurrency. This decision comes after a February mistake exposed a wallet recovery phrase and allowed unauthorized transfers of confiscated crypto. The NTS wants to prevent similar incidents in the future.
NTS Tightens Security After Accidental Crypto Leak
On February 26, 2026, the NTS accidentally revealed a mnemonic code in a public press release. This code is like a secret key that gives full access to the crypto wallet. As a result, some of the seized cryptocurrency was moved without permission. The mistake caused concern among officials and the virtual asset industry.
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Because of this, the NTS decided that it would no longer store seized crypto itself. Instead, it will hire private custodial companies. These companies specialize in keeping digital assets secure and have the right systems to prevent theft. The NTS hopes this will make the process safer and more reliable.
The NTS is setting rules for choosing which private companies can hold seized crypto. Key factors include security standards, company size, and protection for users. The agency also wants providers that carry insurance in case of theft or loss. Officials are still finalizing detailed standards for selection.
A source from the virtual asset industry said that not all custody companies will qualify. The NTS is looking closely at each company’s security level and experience before making a choice. Experts will also provide advice to ensure that the chosen companies meet international best practices.
South Korea Sets Rules for Safe Crypto Storage
The goal is to start selecting private custodial providers in the first half of 2026. Once chosen, these companies will store the seized cryptocurrency safely. This move shows that the NTS is taking virtual asset management seriously and wants to avoid mistakes in the future.
The NTS created a special team called the “Virtual Asset Management System Advanced Task Force.” The task force was launched on March 11, 2026, and will manage the process. It will set guidelines for storage, sale, and handling of seized crypto. It will also check the security of external professional institutions.
Ko Young-il, head of the task force, said that using private custodians is a method common in developed countries. He added that South Korea plans to implement the system in the first half of 2026 after consulting experts. The task force will also expand professional education and improve work manuals to make all processes safer and more reliable.
By moving to private custodial providers, South Korea’s NTS hopes to protect public funds and maintain trust in the government’s handling of digital assets. The change also reflects the growing importance of cryptocurrency in financial systems and the need for strong security measures.
This step is part of a wider effort to improve the management of virtual assets. With clear standards, professional custody, and expert oversight, the NTS aims to prevent theft and protect state-controlled cryptocurrency holdings in the future.
