- The proposal would allow regulators to freeze transactions before suspicious actors can launder or move proceeds.
- Authorities seek to extend market-style enforcement tools used in the stock market to cryptocurrency trading.
- Recent moves by tax and financial regulators signal stricter enforcement of traditional financial rules.
South Korea’s financial regulators are reconsidering whether to allow the suspension of transactions to prevent suspected price manipulators from acting or laundering gains.
The goal is to act earlier in fast-moving crypto markets where proceeds can be quickly shifted and become harder to trace.
If adopted, the change would mark a significant second phase of crypto regulation in the country, expanding user protections and directly addressing market abuse, alongside ongoing work on stablecoin rules that have not yet been finalized.
Early intervention tools
The Financial Services Commission (FSC) is reviewing a payment-suspension system that would enable regulators to block crypto transactions at an earlier stage.
Local outlet Newsis reported on Tuesday that the proposal would allow authorities to act before suspected manipulators withdraw or launder potentially illicit gains.
Under the current framework, freezes often depend on court orders.
That process can take time, giving suspects an opportunity to conceal funds. Regulators say crypto markets move faster than traditional assets, making delays costlier.
The proposed system would mirror tools already used on South Korea’s stock market, where accounts linked to suspected manipulation can be frozen before profits are realized.
Closing enforcement gaps
Market watchdogs have flagged specific tactics that can generate large but unstable profits in crypto trading.
These include front-running, automated wash trading, and placing large buy orders that artificially inflate prices.
Such gains can vanish quickly when assets are moved off an exchange.
Regulators argue that crypto markets require stronger tools because assets can be relatively easily transferred to private wallets. That mobility, they say, makes timely intervention crucial.
Lessons from capital markets
South Korea has already expanded its powers in traditional finance. Amendments to the Capital Markets Act came into force in April 2025.
Those changes allow accounts to be frozen on suspicion of unfair trading or illegal short selling.
According to reports, the FSC discussed extending similar measures to cryptocurrencies during a closed meeting in November.
Talks took place as authorities reassessed the first case of price manipulation handled under the revised capital markets rules.
South Korea steps up regulation
The proposal follows a series of steps that underscore South Korea’s effort to align cryptocurrency regulation with standards applied to conventional financial markets.
On October 10, the National Tax Service warned that crypto assets held in cold wallets remain subject to enforcement, noting its authority to conduct home searches and seize offline storage devices during tax-evasion investigations.
On December 7, the Financial Services Commission reviewed the idea of applying bank-style liability to crypto exchanges, which would require platforms to compensate users for losses caused by hacks or system failures even without proven negligence.