South Korea will hold crypto exchanges accountable like banks, compensating users for all hack losses.
Upbit lost $30.1M in Solana tokens, exposing weaknesses in exchange security and reporting.
Lawmakers push for stablecoin rules, targeting stronger oversight and stricter IT security standards.
South Korea is taking decisive action following the recent Upbit hack, moving to hold crypto exchanges to the same accountability standards as banks. The Financial Services Commission (FSC) intends to implement no-fault liability rules, requiring exchanges to reimburse users for losses from hacks, even when the platforms are not directly at fault.
The move comes after Upbit lost over 104 billion Solana-based tokens, worth $30.1 million, to external wallets on November 27. Regulators argue that recurring system failures demand stricter oversight and higher operational standards.
The FSC is reviewing provisions that mirror the protections banks currently enjoy under Korea’s Electronic Financial Transactions Act. Besides compensating users for losses, exchanges will face mandatory IT security upgrades and tougher penalties for breaches.
Lawmakers are considering fines up to 3% of annual revenue for hacks, the same threshold banks face. Currently, crypto platforms risk a maximum fine of $3.4 million. Consequently, exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax will need to significantly enhance internal controls and reporting procedures.
Stricter Oversight After Upbit Breach
The Upbit incident exposed gaps in exchange transparency. Although detected shortly after 5 am, Upbit delayed reporting to the Financial Supervisory Service (FSS) until nearly 11 am. Some lawmakers allege the delay coincided with Dunamu finalizing a merger with Naver Financial.
Additionally, data from the FSS shows South Korea’s five major exchanges suffered 20 system failures since 2023. These outages affected over 900 users and caused combined losses exceeding 5 billion won. Upbit alone reported six failures impacting 600 customers.
Also, lawmakers are advocating for more extensive legislative changes, such as a measure pertaining to stablecoins. They have set a deadline of December 10 and threatened to take unilateral action if authorities fail to meet it.
In January 2026, the ruling party intends to hold an extraordinary session of the National Assembly to discuss the measure. As a result, the government is under increasing pressure to improve cryptocurrency regulations and protect consumers.
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