- The proposal would allow regulators to suspend transactions before illicit gains are laundered or transferred.
- Authorities aim to extend stock-market enforcement tools to cryptocurrency trading.
- Recent actions by tax and financial regulators show a stricter alignment with traditional financial rules.
South Korea’s financial regulators are considering whether to allow transaction suspensions to prevent alleged market manipulators from moving or laundering their proceeds.
The goal is to intervene earlier in fast-moving crypto markets, where profits can be transferred quickly and become much harder to trace.
If adopted, the change would represent a significant step in the second phase of the country’s cryptocurrency regulation. This stage is expected to go beyond user protection to address market abuse more directly, running alongside work on stablecoin rules that have not yet been formally introduced.
Early intervention tools
The Financial Services Commission is reviewing a payment-suspension system that would enable regulators to block crypto transactions at an earlier stage.
Local media Newsis reported that the proposal would give authorities the ability to act before suspected manipulators divert or launder potentially illicit gains.
Under current procedures, freezes often depend on court orders.
That process can take time, allowing suspects to conceal funds. Regulators say crypto markets move faster than traditional assets, making delays more costly.
The proposed system would mirror tools already used in South Korea’s equity markets, where accounts linked to suspected manipulation can be frozen before profits are realized.
Closing enforcement gaps
Market supervisors have identified specific tactics that can generate large, destabilizing gains in cryptocurrency trading.
These include automated trading strategies, front running, and placing large buy orders to inflate prices.
Such profits can vanish quickly once assets are transferred off exchanges.
Regulators argue that crypto markets need stronger tools because assets can be moved to private wallets with relative ease. That mobility, they say, makes early intervention crucial.
Lessons from financial markets
South Korea has already expanded its powers in traditional finance. Amendments to the Capital Markets Act took effect in April 2025.
Those changes allow accounts to be frozen in cases of suspected unfair trading or illegal short selling.
According to reports, the FSC discussed extending similar measures to crypto during a closed-door meeting in November.
Those discussions took place as authorities reviewed the country’s first price-manipulation case under the amended capital markets rules.
Tightening regulation in South Korea
The proposal builds on a series of measures highlighting South Korea’s effort to align crypto regulation with standards applied in conventional financial markets.
On October 10, the National Tax Service warned that crypto holdings stored in cold wallets remain subject to enforcement, emphasizing its authority to conduct home searches and seize offline storage devices in tax-evasion investigations.
On December 7, the Financial Services Commission reviewed the idea of applying bank-style liability to crypto platforms, which would require platforms to compensate users for losses caused by hacks or system failures even without proven negligence.