South Korea Taps Private Crypto Custodians After $4.8M Tax Service Breach
South Korea’s National Tax Service plans to transfer custody of seized digital assets to private providers following a major security lapse that occurred when the agency accidentally published a wallet recovery phrase in documents released on February 26. The exposed phrase allowed unauthorized transfers totaling about $4.8 million, triggering an internal review and emergency measures to secure remaining assets. Officials described outsourcing as a fast way to access stronger custody technology and insurance.
The decision matters because it marks a shift toward reliance on private crypto infrastructure by a government agency and raises questions around oversight, procurement and cost. Private custodians can offer hardware security modules, multi-party computation and carrier-grade insurance, but lawmakers and watchdogs are likely to demand stricter transparency and audit requirements. The incident is expected to accelerate rule-making on how public bodies handle seized digital assets and to influence similar policies elsewhere.