South Korea to Hold Crypto Exchanges to Bank-Level Rules

South Korea plans to make strict rules for crypto exchanges, holding them to the same standards as banks to protect customers. 

This comes after a big hack at Upbit and several system problems at the country’s main exchanges. Regulators want users to be paid for losses, even if the exchange is not directly responsible.

South Korea Plans Stricter Rules for Crypto Exchanges

As revealed, the Financial Services Commission (FSC) is looking at new rules for crypto exchanges. These rules would make exchanges pay customers for losses from hacks or system problems, even if the exchange is not to blame.

Currently, only banks and electronic payment firms in South Korea follow this no-fault model as defined under the Electronic Financial Transactions Act. The upcoming legislative revisions are expected to include tougher IT security standards, higher operational requirements, and stricter penalties for breaches. 

Currently, crypto exchanges face a maximum penalty of $3.4 million. Lawmakers may set fines of up to 3% of a crypto exchange’s yearly revenue for hacks, the same as the rules for banks.

This proposed rule comes as South Korea is making efforts to regulate the fast-changing digital asset industry. In September, the FSC shared plans to introduce new regulations for crypto lending platforms. These rules aim to better protect consumers and improve transparency in the crypto market.

Upbit Hack and Exchange Failures Raise Regulatory Scrutiny 

The proposal comes after recent data from the Financial Supervisory Service (FSS) shows that South Korea’s five major exchanges have reported 20 system failures since 2023. These trading platforms included Upbit, Bithumb, Coinone, Korbit, and Gopax. 

These system problems affected more than 900 users and caused total losses of over 5 billion won. Upbit alone accounted for six incidents impacting 600 customers. These incidents highlight ongoing technical vulnerabilities in the country’s crypto trading platforms.

In November, hackers took more than 104 billion Solana tokens from an Upbit wallet. The tokens, worth around 44.5 billion won, equivalent to $30.1 million, were moved to other wallets in under an hour. The hack showed the risks in the crypto sector and led to calls for stricter rules.

Upbit Hack Sparks Political Scrutiny, Lawmakers Push Stablecoin Bill

The Upbit hack drew attention from politicians because it was reported late. Although the breach occurred shortly after 5 a.m., the exchange notified the FSS only around 11 a.m. Some lawmakers have suggested the delay may have been intentional, coinciding with Dunamu’s merger with Naver Financial. 

Additionally, Lawmakers are pressing regulators to deliver a draft stablecoin bill by December 10. They have warned they may advance the legislation without the government if the deadline is missed. Officials hope to bring the bill to debate during the National Assembly’s extraordinary session in January 2026, following repeated delays in its progress.