Korean courts are establishing enforcement procedures that reflect the characteristics of virtual assets such as bitcoin. As the enforcement methods spanning from seizure to sale and liquidation are institutionally organized, the predictability of civil enforcement over virtual assets is expected to improve.
According to the legal community Wednesday, the Supreme Court gave advance notice of legislation on Monday for a "partial amendment to the rules of civil execution" containing such provisions.
The core of the amendment is that it includes not only virtual assets held by debtors but also transfer claims against exchanges and others as subject to compulsory enforcement, systematically regulating the related procedures.
Going forward, when a court issues a seizure decision on virtual assets held at an exchange, disposal of those assets will be restricted. Afterward, the exchange and others must transfer the seized virtual assets to the execution officer, and the seizure takes effect from the moment the execution officer receives them.
The method of liquidating seized virtual assets has also been clarified. Upon a creditor's application, the court may transfer the virtual assets directly to the creditor or order the execution officer to sell them. The execution officer will open a dedicated account at the exchange to receive the assets, then proceed with the liquidation process either by disposing of them at market price or by entrusting the sale to the exchange.
A procedure has also been newly established allowing virtual assets that are difficult to sell immediately due to sluggish trading to be exchanged into major virtual assets with high liquidity, such as bitcoin, before disposal. A preservation measure system will also be introduced to prevent debtors from moving coins to other electronic wallets during litigation.
The National Court Administration plans to gather opinions from various sectors until the 11th of next month, finalize the amendment, and implement it from October.
