South Korea’s financial authorities are considering whether to allow regulators to pre-emptively freeze cryptocurrency accounts suspected of price manipulation, according to local media reports.
The Financial Services Commission (FSC) is reviewing the possible introduction of a payment suspension system that would block transactions before suspects are able to launder potentially illicit gains, Newsis reported Tuesday. The proposal would mirror enforcement tools already used in South Korea’s stock market, where accounts can be frozen before profits from suspected manipulation are withdrawn.
South Korea’s first phase of crypto legislation focused primarily on user protection. A second phase, which has yet to be formally introduced, is expected to establish a broader regulatory framework covering stablecoins and tougher measures against market abuse.
Extending stock market enforcement tools to crypto
Under the current framework, authorities must obtain court warrants to freeze assets linked to suspected crypto manipulation, a process that can give offenders time to conceal or move funds.
The FSC has warned that tactics such as front-running, automated wash trading and aggressive buy orders can generate large unrealized gains that may quickly vanish. The watchdog has argued that earlier intervention is needed to give regulators more effective tools to address such illicit activity.
Amendments to South Korea’s Capital Markets Act that took effect in April 2025 introduced account freezes for suspected unfair trading and illegal short selling. The FSC reportedly discussed extending similar powers to crypto markets during a closed-door meeting in November, as it reviewed the first price manipulation case under the revised rules.
Regulators have said crypto markets warrant stronger oversight due to the ease with which assets can be transferred into private wallets.
Broader regulatory tightening
The proposal adds to a series of measures signaling South Korea’s efforts to align crypto regulation more closely with traditional financial standards.
On Oct. 10, the National Tax Service warned that crypto assets stored in cold wallets are not beyond its reach, citing its authority to conduct home searches and seize offline storage devices in tax evasion cases. On Dec. 7, the FSC also explored imposing bank-level liability on crypto exchanges, potentially requiring platforms to compensate users for losses caused by hacks or system failures even in the absence of proven negligence.
Together, these steps point to a shift toward earlier and broader regulatory intervention aimed at preventing harm to market participants — a key objective of South Korea’s first phase of crypto regulation.
