Revised civil enforcement rules take effect

The Supreme Court in Seocho-gu, Seoul. [Yonhap]
The Supreme Court in Seocho-gu, Seoul. [Yonhap]

South Korea's Supreme Court has established rules spelling out how creditors can seize and liquidate virtual assets such as bitcoin to recover debts. As enforcement cases involving virtual assets jump, the revised rules clarify the process for freezing and cashing out holdings kept both on exchanges and in private wallets.

According to the Supreme Court's Court Administration Office, the amended civil enforcement rules — which introduce dedicated procedures for virtual asset enforcement — took effect Nov. 1. The revised rules distinguish between types of virtual asset holdings when defining what can be seized, and set out specific steps for selling seized assets or transferring them to creditors.

The revision reflects a rapid increase in enforcement cases involving virtual assets. According to the Court Administration Office, civil enforcement cases naming the 28 registered domestic virtual asset service providers as third-party debtors jumped from 423 in 2023 to 958 in 2024 and then to 3,136 last year. This year, 3,186 cases were filed between January and September alone, already surpassing last year's full-year total — roughly 7.5 times the 2023 figure.

Virtual assets had long posed challenges for enforcement because they have no physical form and lack public registration systems comparable to real estate titles or vehicle registrations. Neither the existing Civil Execution Act nor the civil enforcement rules contained provisions specific to virtual assets, so practitioners had relied on procedures designed for "other property rights."

The revised rules establish separate enforcement procedures depending on whether a debtor holds virtual assets through an exchange or manages them directly through a private wallet.

When a debtor holds virtual assets in an exchange account, the rules require creditors to seize the debtor's "virtual asset transfer claim" — the right to request that the exchange move the assets to a designated address — rather than the assets themselves. Once a court issues a seizure order, the exchange may not transfer the assets to the debtor, and the debtor may neither dispose of that right nor receive a transfer of the assets.

The rules also spell out how to liquidate a seized virtual asset transfer claim. A court may order the exchange to sell the assets on the creditor's behalf, or direct that the assets be moved to an account held in the name of a court enforcement officer before being sold. If liquidation through the original exchange proves difficult, another exchange may be used. Altcoins and other assets that are hard to sell directly may first be converted into more liquid virtual assets before being sold. Proceeds are distributed to creditors through a dividend process.

When a debtor manages virtual assets directly through a private wallet, the assets themselves may be seized. A court must simultaneously prohibit the debtor from disposing of the assets and order their transfer to an enforcement officer, who can then move them to an address designated by the creditor or sell them through an exchange. The requirement for an immediate transfer — rather than a simple disposal ban — reflects the fact that anyone holding a private key can move virtual assets electronically at any time, making a prohibition alone insufficient to secure effective enforcement.

The Court Administration Office set up a TF in July last year to develop virtual asset enforcement procedures, reviewing relevant legal principles and domestic and foreign regimes while gathering input from related agencies and the virtual asset industry. "As the procedures for seizing and liquidating virtual assets become more concrete, we expect to better support creditors in realizing their rights, protect debtors' procedural rights, and clarify the operational standards for courts, enforcement officers and virtual asset service providers — ultimately improving the predictability of virtual asset enforcement," an official at the Court Administration Office said.


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