• South Korea’s Deputy Prime Minister ordered a nationwide audit and overhaul of seized cryptocurrency administration after the Nationwide Tax Service by accident disclosed a pockets seed phrase in a press launch.
  • The safety breach allowed an unknown occasion to briefly drain a number of million {dollars} in tokens, following a separate incident the place Seoul police misplaced entry to $1.4 million in Bitcoin attributable to poor third-party custody.
  • These failures have accelerated the implementation of institutional-grade custody requirements and the event of the Digital Asset Fundamental Regulation scheduled for 2026.

After an incident that concerned the Nationwide Tax Service, which disclosed a pockets seed phrase in a press launch highlighting digital property confiscated from a delinquent taxpayer, South Korea’s Deputy Prime Minister and Finance Minister, Koo Yun-cheol, ordered a nationwide audit and overhaul of how public establishments handle seized cryptocurrency.

The uncovered phrase allowed an unknown occasion to briefly drain a pockets holding tokens value a number of million {dollars} earlier than the funds have been recovered.

Koo said that the federal government doesn’t maintain digital property for funding or speculative functions, however solely by means of authorized enforcement actions reminiscent of tax assortment and prison investigations.

In an earlier case, police in Seoul’s Gangnam district misplaced entry to 22 Bitcoin (BTC), valued at about US$1.4 million (AU$1.8 million) on the time, after permitting a third-party agency to regulate the seized property with out retaining the non-public keys. The incident led to an ongoing bribery investigation.

Learn extra: Bloomberg and Kaiko Bring Licensed Financial Data Onchain to Power Tokenised Markets

Full Overhaul

Following the incidents, Yun-cheol directed an pressing assessment of all cryptocurrency held by public our bodies and referred to as for reforms to custody and safety procedures. The measures embrace stronger key administration practices, tighter inner controls, and enhanced monitoring to stop unauthorised transfers.

The instances have accelerated efforts to introduce institutional-grade custody requirements for government-held digital property. They’re additionally feeding into work on South Korea’s Digital Asset Fundamental Regulation, which is predicted to be launched in 2026.

Learn extra: US$3 Billion in ‘Idle’ XRP Heads to DeFi as Xaman and Flare Streamline Access

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