South Korea's government-run New Leap Fund does not screen applicants' cryptocurrency holdings, leaving a gap in the country's debt-relief framework that previously allowed borrowers holding 430 million won ($311,000) in digital assets to receive 120 million won ($86,900) in debt forgiveness under a similar program.

The Financial News reported the finding on September 29, citing an analysis Korea Asset Management Corp. (Kamco) submitted to National Assembly member Kim Jae-seop, who sits on the Political Affairs Committee. The review found that Kamco does not verify crypto balances when processing applications. That omission persists despite revisions to the Credit Information Act that allow government debt-adjustment agencies to access virtual-asset data without a debtor's consent.

What does the New Leap Fund cover?

The program targets individuals and sole proprietors delinquent for more than seven years, with unsecured principal debt of 50 million won ($36,100) or less. It aims to rehabilitate long-term defaulters excluded from mainstream credit. Kamco's stated approach: skip crypto checks at the application stage, then rely on its hidden-assets reporting center to surface concealed holdings through tips, after which it can claw back forgiven amounts or pursue damages.

Kamco told the assembly it has not yet identified any case in which additional assets, including crypto, surfaced after a borrower's debt had already been canceled.

What did the New Start Fund audit find?

A December 2024 audit by the Board of Audit and Inspection of the parallel New Start Fund uncovered multiple concealment cases. One borrower held roughly 430 million won in crypto while receiving 120 million won in relief. Of 17,533 borrowers forgiven at least 30 million won ($21,700), 269 held crypto valued at 10 million won ($7,200) or more. Their top balance reached 570 million won ($412,000). Total relief to that group came to 22.5 billion won ($16.3 million).

Why hasn't the gap been closed?

After the audit, the Financial Services Commission said it would consult virtual-asset service providers on verifying debt-adjustment applicants' crypto holdings. That undertaking has not extended to the New Leap Fund, which continues processing applications without crypto screening. The inconsistency has drawn criticism from lawmakers, who argue the verification regime across the two programs is misaligned and that Kamco's reliance on tips creates an enforcement gap.

What are the operational stakes?

The omission carries two consequences. First, it allows applicants with the means to repay through crypto holdings to qualify for write-offs, weakening the program's targeting. Second, it shifts enforcement from front-end eligibility to after-the-fact recovery, leaving Kamco exposed to clawback proceedings only after relief has been disbursed. The result is a structural discount in program integrity, since relief is granted on the assumption of full asset disclosure that Kamco does not actually test.

The Financial Services Commission has framed the issue as one of system design rather than sanction, signaling gradual integration of virtual-asset data into credit screening. The next decision point will come as the commission's consultations with virtual-asset service providers yield concrete procedures, a process that will determine whether the New Leap Fund adopts the same disclosure regime as the New Start Fund or maintains its current reliance on tips.