Korea Courts Give Exchanges Seven-Day Deadline for Debtor Asset Freeze

South Korea's Supreme Court is proposing new rules that would allow courts to force cryptocurrency exchanges to identify and freeze debtor holdings within seven days. The proposed amendments to the Civil Execution Rules aim to standardize crypto seizure for civil debt collection in a market where 16.29 million people use the five largest exchanges.

The changes would create a standardized process for creditors to freeze, identify, and liquidate virtual assets held by debtors. If finalized, the rules are expected to take effect on October 1, giving exchanges roughly seven weeks after the consultation closes to prepare for their new role in civil debt enforcement.

Creditors could attach the debtor's right to receive the assets rather than initially seizing the coins themselves. Once served, the exchange would be barred from transferring the corresponding assets to the debtor, who would also lose the ability to dispose of the claim.