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South Korea plans to clasp crypto exchanges to the aforesaid no-fault compensation standards arsenic banks aft an Upbit hack exposed large gaps successful user protection.
South Korea is preparing to enforce bank-level, no-fault liability rules connected crypto exchanges, holding exchanges to the aforesaid standards arsenic accepted fiscal institutions amid the caller breach astatine Upbit.
The Financial Services Commission (FSC) is reviewing caller provisions that would necessitate exchanges to compensate customers for losses stemming from hacks oregon strategy failures, adjacent erstwhile the level is not astatine fault, The Korea Times reported connected Sunday, citing officials and section marketplace analysts.
The no-fault compensation exemplary is presently applied lone to banks and physics outgo firms nether Korea’s Electronic Financial Transactions Act.
The regulatory propulsion follows a Nov. 27 incidental involving Upbit, operated by Dunamu, successful which much than 104 cardinal Solana-based tokens, worthy astir 44.5 cardinal won ($30.1 million), were transferred to outer wallets successful nether an hour.
Crypto exchanges look bank-level oversight
Regulators are besides reacting to a signifier of recurring outages. Data submitted to lawmakers by the Financial Supervisory Service (FSS) shows the country’s 5 large exchanges, Upbit, Bithumb, Coinone, Korbit and Gopax, reported 20 strategy failures since 2023, affecting implicit 900 users and causing much than 5 cardinal won successful combined losses. Upbit unsocial recorded six failures impacting 600 customers.
The upcoming legislative revision is expected to mandate stricter IT information requirements, higher operational standards and tougher penalties. Lawmakers are weighing a regularisation that would let fines of up to 3% of yearly gross for hacking incidents, the aforesaid threshold utilized for banks. Currently, crypto exchanges look a maximum good of $3.4 million.
The Upbit breach has besides drawn governmental scrutiny implicit delayed reporting. Although the hack was detected soon aft 5 am, the speech did not notify the FSS until astir 11 am. Some lawmakers person alleged the hold was intentional, occurring minutes aft Dunamu finalized a merger with Naver Financial.
Related: South Korea targets sub-$680 crypto transfers successful sweeping AML crackdown
South Korea pushes for stablecoin measure
As Cointelegraph reported, South Korean lawmakers are besides pressuring fiscal regulators to present a draught stablecoin measure by Dec. 10, informing they volition propulsion up without the authorities if the deadline is missed.
The ruling party’s ultimatum follows dilatory advancement and repeated delays, with officials hoping to bring the measure to statement during the National Assembly’s bonzer league successful January 2026.
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