South Korea to impose bank-level liability on crypto exchanges after Upbit hack: Report

Amin Haqshanas 40 seconds ago South Korea to impose bank-level liability on crypto exchanges after Upbit hack: Report South Korea plans to hold crypto exchanges to the same no-fault compensation standards as banks after an Upbit hack exposed major gaps in consumer protection. Listen 0:00 News COINTELEGRAPH IN YOUR SOCIAL FEED South Korea is preparing to impose bank-level, no-fault liability rules on crypto exchanges, holding exchanges to the same standards as traditional financial institutions amid the recent breach at Upbit. The Financial Services Commission (FSC) is reviewing new provisions that would require exchanges to compensate customers for losses stemming from hacks or system failures, even when the platform is not at fault, The Korea Times reported on Sunday, citing officials and local market analysts. The no-fault compensation model is currently applied only to banks and electronic payment firms under Korea’s Electronic Financial Transactions Act. The regulatory push follows a Nov. 27 incident involving Upbit , operated by Dunamu, in which more than 104 billion Solana-based tokens, worth approximately 44.5 billion won ($30.1 million), were transferred to external wallets in under an hour. Related: Do Kwon says five-year US sentence is enough as he faces 40 years in South Korea Crypto exchanges face bank-level oversight Regulators are also reacting to a pattern of recurring outages. Data submitted to lawmakers by the Financial Supervisory Service (FSS) shows the country’s five major exchanges, Upbit, Bithumb, Coinone, Korbit and Gopax, reported 20 system failures since 2023, affecting over 900 users and causing more than 5 billion won in combined losses. Upbit alone recorded six failures impacting 600 customers. The upcoming legislative revision is expected to mandate stricter IT security requirements, higher operational standards and tougher penalties. Lawmakers are weighing a rule that would allow fines of up to 3% of annual revenue for hacking incidents, the same threshold used for banks. Currently, crypto exchanges face a maximum fine of $3.4 million. The Upbit breach has also drawn political scrutiny over delayed reporting. Although the hack was detected shortly after 5 am, the exchange did not notify the FSS until nearly 11 am. Some lawmakers have alleged the delay was intentional, occurring minutes after Dunamu finalized a merger with Naver Financial . Related: South Korea targets sub-$680 crypto transfers in sweeping AML crackdown South Korea pushes for stablecoin bill As Cointelegraph reported, South Korean lawmakers are also pressuring financial regulators to deliver a draft stablecoin bill by Dec. 10, warning they will push ahead without the government if the deadline is missed. The ruling party’s ultimatum follows slow progress and repeated delays, with officials hoping to bring the bill to debate during the National Assembly’s extraordinary session in January 2026. Magazine: 2026 is the year of pragmatic privacy in crypto — Canton, Zcash and more # Bitcoin # Cryptocurrencies # Banks # South Korea # Cryptocurrency Exchange # Hacks # Upbit # Regulation Add reaction