South Korea Plans to Exclude Crypto Investment Debt from Personal Bankruptcy Liquidation

Odaily News: Recently established rehabilitation courts in Daejeon, Daegu, and Gwangju, South Korea, will implement new guidelines. During personal debt restructuring hearings, debts arising from stock or cryptocurrency investments will be excluded from liquidation calculations. This move aims to reduce the total amount debtors need to repay to creditors, in order to prevent citizens from falling into personal bankruptcy and to address South Korea's increasingly severe household debt problem (household debt as a percentage of GDP reached 92% in 2025).

Previously, courts in Suwon and Busan had already classified such investment losses as "general property" losses rather than "speculative debts." Although this policy faces public criticism for potentially triggering moral hazard, the courts stated they will conduct strict audits to prevent all attempts to conceal assets by disguising investment failures.

According to data from the Seoul Rehabilitation Court, the volume of related cases has increased by nearly 13% since 2023. (DL News)