- The proposal would allow regulators to suspend transactions before illicit gains are laundered or moved.
- Authorities aim to extend stock‑market–style enforcement tools to cryptocurrency trading.
- Recent actions by tax and financial regulators show closer alignment with traditional financial rules.
South Korea’s financial regulators are considering whether to allow the suspension of cryptocurrency transactions to prevent suspected price manipulators from moving or laundering profits.
The intent is to intervene earlier in fast-moving crypto markets, where proceeds can be transferred quickly and become harder to trace.
If implemented, the change would mark a significant step in the second phase of the country’s crypto regulation, expected to go beyond basic consumer protection and directly address market abuse, alongside work on stablecoin rules that have not yet been formally introduced.
Early intervention tools
The Financial Services Commission (FSC) is reviewing a payment suspension system that would let regulators block crypto transactions at an earlier stage.
Local outlet Newsis reported that the proposal would give authorities the power to act before suspected manipulators realize or launder potentially illicit gains.
Under the current framework, freezes typically depend on court orders.
That process can be slow, giving suspects time to conceal funds. Regulators argue that crypto markets move faster than traditional assets, making delays more costly.
The proposed system would mirror tools already used in the Korea Exchange, where accounts linked to suspected manipulation can be frozen before profits are realized.
Closing enforcement gaps
Market regulators have highlighted specific tactics that can produce large but unstable profits in crypto trading.
Those tactics include automated trading strategies, front‑running, and placing large buy orders that artificially inflate prices.
Such gains can vanish quickly once assets are moved off exchanges.
Regulators say crypto markets need stronger tools because assets can be transferred to private wallets relatively easily. This mobility, they argue, makes early intervention essential.
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 authorities to freeze accounts over suspected unfair trading or illegal short‑selling.
Reports indicate the FSC discussed extending similar measures to cryptocurrencies during a closed‑door meeting in November.
The discussions took place while authorities reviewed the first price‑manipulation case handled under the amended capital markets rules.
South Korea tightens crypto oversight
The proposal builds on a string of measures that reflect South Korea’s effort to align crypto regulation with standards applied in conventional financial markets.
On October 10, the National Tax Service warned that cryptocurrencies stored in cold wallets remain subject to enforcement, noting its authority to carry out house searches and seize offline storage devices during tax‑evasion investigations.
On December 7, the Financial Services Commission examined 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.