Catenaa, Thursday, December 11, 2025-South Korea plans to impose bank-level liability on cryptocurrency exchanges, reports say.
This follows a $30.1 million hack at Upbit last month, signaling a shift toward treating major platforms with the same regulatory rigor as traditional financial institutions.
The Financial Services Commission is reviewing rules that would require exchanges to compensate users for losses caused by hacks or system failures, regardless of fault, similar to protections for banks and electronic payment firms.
The move follows a November 27 breach at Upbit that saw 104 billion Solana-based tokens, worth 44.5 billion won ($36 million), transferred to external wallets in just 54 minutes.
Existing laws prevented regulators from forcing compensation, exposing gaps in the crypto sector’s accountability framework.
Regulatory reforms would require upgraded IT security, stronger system standards, and fines up to 3 percent of annual revenue for hacking incidents, replacing the current 5 billion won cap.
Upbit alone recorded six system failures affecting more than 600 users since 2023.
Lawmakers cited delayed reporting, with Upbit notifying regulators more than six hours after detecting the hack, raising concerns about disclosure practices.
The crackdown also extends to anti-money laundering, with Korea’s Financial Intelligence Unit preparing sanctions against major exchanges and expanding the crypto travel rule to transactions under 1 million won.
New rules would bar individuals with convictions for tax or drug offenses from holding major stakes in licensed platforms.
Legislative amendments are expected in the first half of 2026, aligning Korea with global standards and strengthening oversight as the country finalizes digital asset and stablecoin frameworks.
South Korea plans bank-level liability and stricter oversight for crypto exchanges after Upbit’s $30M hack, tightening security and AML rules.
