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South Korean authorities are considering stricter regulations for crypto exchanges. The proposed changes could bring exchange standards in line with traditional financial institutions. Policymakers argue that the shift would protect users and tighten operational oversight.
A suspected breach at Upbit on November 27 intensified the debate over crypto exchange liability. Reports valued the unauthorized transfers at about 44.5 billion won ($30.1 million). The incident involved more than 104 billion Solana-based tokens that moved to external wallets in under an hour.
Regulators also focused on the exchange’s reporting timeline. Upbit detected the abnormal activity shortly after 5 a.m. It reportedly notified the Financial Supervisory Service close to 11 a.m. Some lawmakers questioned whether the delay coincided with corporate developments at Dunamu.
The Financial Services Commission is reviewing revisions that would extend no-fault compensation to crypto exchanges. The Electronic Financial Transactions Act now applies this model to banks and electronic payment firms. A new rule would require exchanges to reimburse customers for losses from hacks or system errors even when investigators find no platform fault.
Officials are also responding to recurring outages across major South Korean exchanges. Data submitted to lawmakers listed 20 system failures since 2023 at Upbit, Bithumb, Coinone, Korbit and Gopax. The incidents affected more than 900 users and caused over 5 billion won in combined losses. Upbit recorded six failures that impacted about 600 customers.
Lawmakers are weighing tougher penalties tied to annual revenue. A proposed threshold would allow fines of up to 3% of revenue for hacking incidents. The approach would align crypto exchange fines with the ceiling used for banks. Current rules reportedly cap fines for exchanges at roughly $3.4 million.
In parallel, the ruling Democratic Party has urged financial authorities to submit a stablecoin regulation proposal by December 10. The party warned it would advance a legislator-initiated bill if the government missed the deadline. Lawmaker Kang Jun-hyeon said the committee expects to take up the draft during the National Assembly’s extraordinary session in January 2026.
Officials have discussed a bank-led consortium model for a Korean won-backed stablecoin. The concept could require commercial banks to hold more than half of the consortium’s shares. The structure would place issuance and reserve management within regulated financial institutions.
The stablecoin push fits a broader plan to expand a domestic KRW stablecoin market. President Lee Jae Myung has identified a won-pegged stablecoin as a priority for financial policy. Regulators, the central bank and lawmakers will continue talks as they shape oversight for stablecoin issuance and crypto exchange operations.
