South Korean Lawmaker Proposes Amendment to Allow Freezing of Suspicious Virtual Asset Accounts
On July 28, 15 members of the South Korean National Power Party, including lawmaker Kim Sang-hoon, proposed an amendment to the Specific Financial Information Act, allowing financial authorities to request a halt on payments for virtual asset accounts suspected of being used for illegal asset transfers.
The amendment defines "account" as a unique identification number provided by exchanges to users. The Financial Intelligence Analysis Institute can request a payment halt for 30 days, extendable once. Non-compliance could result in fines of up to 100 million KRW, with the law taking effect six months after its announcement.
This event drives South Korea's crypto regulation to extend account-level freezes, with funds and compliance resources flowing towards rapid payment halt mechanisms. Law enforcement benefits from tools against illegal transfers, while exchanges and users face pressure on trading freedom.
Source: Public Information
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South Korea has previously strengthened bank account freezes to combat telecom fraud, now extending similar powers to virtual asset accounts. By defining exchange identification numbers, precise halts can be achieved, with a 30-day freeze plus extension and high fines ensuring compliance.
On the capital front, legislators are extending anti-money laundering and anti-illegal transfer focuses from traditional finance to crypto, motivated by the need to close loopholes for rapid asset transfers, concentrating resources on direct command authority for the Financial Intelligence Analysis Institute rather than post-event accountability.
Similar to other jurisdictions expanding crypto account freeze powers, the current phase is shifting from transaction monitoring to real-time payment halts.
Essentially, this represents a regulatory change: virtual asset accounts are included in the same freeze framework as bank accounts, as the speed of illegal transfers necessitates immediate intervention, thereby restructuring compliance and user fund control boundaries for crypto exchanges.
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- Account identification number is the key entry point for freeze authority.
- A 30-day freeze window is sufficient to block most illegal transfers.
- The severity of fines determines the speed of compliance by exchanges.