- The proposal would allow regulators to suspend transactions before gains can be laundered or moved.
- Authorities aim to extend exchange-style enforcement tools to crypto trading.
- Recent actions by tax and financial regulators show a closer alignment with traditional financial rules.
South Korea’s financial regulators are considering powers to suspend transactions before suspected price manipulators can move assets or launder proceeds.
The objective is to intervene earlier in fast-moving crypto markets, where profits can be transferred quickly and are often harder to trace.
If adopted, 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 target market abuse. This would occur alongside work on stablecoin rules that have not yet been officially implemented.
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.
The local media outlet Newsis reported that the proposal would allow authorities to act before suspected manipulators pay out or launder potentially illegal gains.
Under the current framework, freezes often rely on court orders.
That process can take time and give suspects room 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 South Korean stock market, where accounts linked to suspected manipulation can be frozen before profits are realized.
Closing enforcement gaps
Market supervisors have singled out specific tactics that can generate large but unstable gains in crypto trading.
These include frontrunning, automated wash trading, and placing large buy orders designed to push prices up.
Those gains can evaporate quickly once assets are withdrawn from exchanges.
Regulators say crypto markets need stronger tools because assets can be moved into private wallets with relative ease. That 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 permit account freezes in cases of suspected unfair trading or illegal short selling.
Reportedly, the FSC discussed in a closed session last November the idea of extending similar measures to crypto.
The talks took place while authorities were reviewing the first price-manipulation case handled under the revised capital market rules.
South Korea tightens regulation
The proposal builds on a series of measures that highlight South Korea’s efforts to align crypto regulation with conventional financial market standards.
On October 10, the National Tax Service warned that crypto holdings stored in cold wallets remain subject to enforcement and stressed its authority to conduct searches and seize offline storage devices in tax-evasion probes.
On December 7, the Financial Services Commission reviewed a proposal to impose bank-style liability on crypto exchanges, which would require platforms to compensate users for losses from hacks or system failures even without proven negligence.