Security interests in digital assets under Korean law: comparative analysis and future directions

Abstract This article examines the creation, perfection, and enforcement of security interests in digital assets—such as cryptocurrencies, non-fungible tokens, and tokenized securities—under Korean law, and compares Korea’s legal framework with those of other major jurisdictions. Despite South Korea’s prominence as a cryptocurrency market and technological hub, existing Korean statutes do not expressly recognize digital assets as objects of property rights or collateral. Consequently, market participants must rely on legal analogies, such as pledging contractual claims against custodians or transferring title outright, creating significant uncertainty. This article undertakes a doctrinal analysis of Korean law, judicial precedents (most notably, the 2018 Korean Supreme Court ruling confirming that digital assets have property-like economic value), and scholarly sources. It also surveys comparative legal developments, including the USA’s creation of ‘controllable electronic records’ under its Uniform Commercial Code amendments, Japan’s workaround of pledging claims against custodians, the United Kingdom’s Property (Digital Assets etc) Act 2025, which confirms crypto-tokens as a new form of personal property, Germany’s Electronic Securities Act for dematerialized securities, and Switzerland’s Distributed Ledger Technology Act for ledger-based rights. In each jurisdiction, legislators and courts increasingly acknowledge ‘control’ of digital assets—a framework akin to possession of tangible property—as the functional basis for perfecting and prioritizing security interests (Unidroit Principles on Digital Assets and Private Law). This article concludes by proposing legislative reforms for South Korea, including: (i) explicit recognition of digital assets as property; (ii) adopting ‘control’ as a method of perfection with corresponding priority rules; (iii) expanding the Movables Security registry to accommodate digital assets; and (iv) clarifying enforcement procedures, particularly in insolvency contexts. These steps would harmonise South Korea’s secured transactions framework with global best practices, reduce legal uncertainty, and enhance the accessibility of credit secured by digital assets in a rapidly evolving financial environment.