South Korea's National Tax Service (NTS) is planning to introduce private custody service providers to manage its seized crypto assets. This move comes after a security incident where private keys were exposed, leading to unauthorized entities transferring assets.
The incident occurred on February 26th when a wallet's recovery mnemonic phrase was accidentally disclosed in an official press release. The published material included an image of a Ledger cold wallet and a piece of paper with the mnemonic phrase written on it. Subsequently, crypto tokens worth approximately $4.8 million were stolen.
According to reports, the NTS will evaluate candidate custody service providers based on a set of criteria, including security requirements, company size, and whether they have purchased insurance in accordance with South Korea's 'Virtual Asset User Protection Act'.
A newly established task force focused on digital asset management systems will be responsible for this outsourcing process. The task force is currently working on several improvements, including refining an operational manual that covers the entire lifecycle of seized assets, from seizure and storage to final liquidation. Additionally, internal assessments and personnel training will be conducted.
Concurrently, the task force will also focus on establishing a dedicated department to centrally manage all cryptocurrency-related affairs.
An NTS official quoted in the report stated that while relevant responsibilities are currently dispersed across multiple departments, preparations are underway to establish a centralized department. Several previous errors have triggered internal investigations.