Inclusion of Digital Assets in 1400 Trillion Won National Assets... Not a 'Korean Version of SBR' but a Management System Overhaul

The government is overhauling the management system for national assets exceeding 1400 trillion won, including digital assets (virtual assets) as part of the new management targets.

However, this policy is not about the government purchasing Bitcoin or strategically stockpiling it. Unlike the U.S. Strategic Bitcoin Reserve (SBR), which accumulates digital assets as reserve assets, the focus is on institutionalizing how to store, evaluate, and dispose of digital assets already managed during investigations and tax collection processes.

Overhaul of 76-Year-Old National Property System... Digital Assets Also Included in Management

On the 15th, the Ministry of Economy and Finance announced the 'K-Asset Project' during a work report held at the Blue House, which aims to shift the management of national assets from preservation and sale to value creation.

To support this, the government will initiate the establishment of the 'Basic National Asset Act.' The existing National Property Act, enacted in 1950, was designed around real estate and is deemed limited in integrating new asset types such as intellectual property (IP) and digital assets.

The proposed direction is to link asset information held by the national and local governments and public institutions and to refine the management system by asset type. A comprehensive survey of national property will be conducted every five years, and related information will be integrated with the digital budget accounting system dBrain.

An AI-based national asset database called 'K-Asset Cloud' will also be gradually established. This year, a legal interpretation chatbot for national property will be introduced into the administrative network, and next year, an Information Strategy Plan (ISP) will be established for the construction of a dedicated database.

While the policy direction to include digital assets in the national asset management system has been proposed, the specific scope and methods have not yet been finalized. The government plans to refine the contents of the legislation through consultations with a public-private joint task force and relevant ministries.

780 Billion Won in Digital Assets Managed by the Government... Classification, Evaluation, and Disposal are Key Issues

The attention surrounding this overhaul is due to the rapid increase in digital assets managed by government agencies.

According to the government’s tally in April, the digital assets seized and confiscated by the central government amount to 780 billion won. By agency, the National Tax Service holds 521 billion won, the Prosecutor's Office 234 billion won, the National Police Agency 22 billion won, and the Customs Service 3 billion won. Digital assets held by public institutions during the donation process are also estimated to be worth 360 million won.

However, it is difficult to immediately consider the 780 billion won as state-owned digital assets or stockpiled quantities. This includes assets seized by investigative agencies and those confiscated by tax authorities, as well as quantities awaiting final disposal through forfeiture or sale.

Seizure and confiscation mean that the state is retaining or restricting the disposal of those assets. This is legally different from assets for which ownership has been confirmed to belong to the state through forfeiture rulings. The total valuation can also vary depending on price fluctuations and the outcomes of cases.

Therefore, the core of this legislation is not to convert the 780 billion won into state reserve assets. Instead, it aims to organize the principles of acquisition, storage, evaluation, and disposal of scattered digital assets within a unified management system.

The current Article 5 of the National Property Act defines the scope of national property to include real estate, ships, aircraft, certain machinery and equipment, rights such as surface rights, securities, and intellectual property rights. Digital assets are not explicitly listed as a separate asset type.

However, this does not mean that there is no legal basis for the state to seize or temporarily hold digital assets. Investigative agencies can seize and preserve digital assets related to crimes according to criminal procedures, and the National Tax Service can also confiscate the digital assets of tax delinquents.

The issue is that there is a lack of unified criteria for classifying these digital assets as general national assets for long-term holding, accounting, or operational disposal. Currently, the common practice for confirmed forfeited digital assets is to liquidate them through exchanges and transfer the proceeds to the national treasury.

According to the Supreme Prosecutor's Office, approximately 13.48777 billion won in forfeited digital assets has been transferred to the national treasury through liquidation from 2018 to September of last year. This is difficult to compare directly with the valuation of 780 billion won at a specific point in time due to differing assessment criteria. However, as the volume managed by institutions has increased, there is a growing demand for more precise storage and liquidation criteria.

During the discussions on the Basic National Asset Act, the scope, evaluation, and disposal criteria for digital assets are expected to be major points of contention.

First, it must be determined which digital assets will be recognized as targets for national asset management. It is still undecided whether to apply the same criteria to major assets like Bitcoin and Ethereum, as well as small tokens acquired during tax collection processes, digital assets whose trading support has ended, stablecoins, and non-fungible tokens (NFTs).

Evaluation criteria are also necessary. Digital asset prices vary depending on exchanges and evaluation timing, and some assets are not traded in the Korean won market. While tax laws provide criteria for determining the acquisition cost of digital assets, it is necessary to examine whether these can be directly applied to the accounting evaluation of national assets.

Disposal principles are also a point of contention. The government is pursuing a plan to report to the National Assembly's standing committee in advance for the sale of national property exceeding 300 billion won after passing through the Cabinet meeting, and to generally prohibit discounted sales below the appraised value. It remains to be seen whether such high-value asset sale controls will also apply to digital assets if they fall within the scope of national assets in the future.

Applying the same sale procedures as real estate to digital assets, which have rapidly changing market prices, could result in missing the appropriate disposal timing. Conversely, if institutions are given broad discretion to sell, disputes may arise regarding price judgments and accountability.

Different Starting Point from U.S. SBR... Starting with Custody and Accounting Standards

It is unreasonable to view this policy as identical to the U.S. Strategic Bitcoin Reserve.

Last year, U.S. President Donald Trump established a separate digital asset stockpile through an executive order, distinct from the Strategic Bitcoin Reserve. The reserve is built on Bitcoin that has been finally attributed to the government through criminal and civil forfeiture procedures, and the Bitcoin included in it is generally not sold.

The U.S. executive order also called for additional Bitcoin acquisition methods to be reviewed in a 'budget-neutral' manner that does not incur additional costs for taxpayers. This clearly indicates the policy goal of holding Bitcoin as a long-term reserve asset.

The South Korean government has not stated any intention to designate digital assets as reserve assets or to purchase them in the market. The Basic National Asset Act is a policy aimed at establishing the basis for managing and accounting for new asset types, which is different in nature from Bitcoin stockpiling or price support policies.

Before promoting the Basic National Asset Act, the government is first reorganizing the public sector's digital asset custody system.

The improvement plan for the public sector's holding and management system announced in April includes transferring assets to agency-named wallets at the scene of seizure and confiscation, and introducing a multi-security system where personal keys and recovery phrases are shared among multiple managers.

The National Tax Service and the National Police Agency are also pursuing entrusted custody through private professional service providers. The aim is to reduce the risk of loss and leakage by transitioning from scattered wallets by agency or responsible person to an agency-named custody system.

Ultimately, the inclusion of digital assets in the Basic National Asset Act is more about connecting public custody with accounting and disposal regulations than about a 'Korean version of Bitcoin stockpiling.'

Future points of observation will include whether the public-private joint task force will define digital assets as a separate type of national asset, and how to distinguish between the seizure and confiscation stage and after forfeiture confirmation. Attention will also be paid to whether the legislation will include evaluation prices, sales authority, and accountability standards for loss and leakage incidents.