according to materials from the site - By ETHNews
South Korea is preparing to introduce one of the strictest updates to digital asset regulation to date, as lawmakers seek to impose bank-level liability standards of 'no fault' for cryptocurrency exchanges.
This change followed the Upbit hack on November 27, 2025, when attackers stole Solana tokens worth approximately $30–37 million.
If adopted, the new rules will require exchanges to fully compensate users for losses, even if the platform is not directly at fault, allowing the crypto industry to comply with protective measures already applied by traditional financial institutions.
The Financial Services Commission (FSC) is currently considering amendments aimed at closing the regulatory gap between crypto platforms and banks. The proposed system introduces several important changes aimed at strengthening investor protection and operational accountability.
The most notable change is the introduction of mandatory compensation, requiring exchanges to reimburse users for any losses caused by hacks, system failures, or security vulnerabilities. This aligns with the Electronic Financial Transactions Act, which already applies to banks.
Lawmakers are also considering significantly increasing fines. While the current maximum fine for hacking-related incidents is capped at 5 billion won, this proposal will raise fines to 3% of annual revenue, significantly increasing the financial consequences for operational negligence.
The package of regulations is also expected to require modernization of IT security infrastructure and tightening of operational standards across all major exchanges. This includes clearer wallet management protocols, identification of hot wallet vulnerabilities, internal controls, and real-time threat monitoring.
Another key issue is reporting delays. Information about the November Upbit hack was not provided to regulators for more than six hours, which, according to authorities, hindered the initial response. New rules are likely to require immediate reporting of suspicious withdrawals or security events.
On November 27, 2025, Upbit detected an 'abnormal withdrawal of funds' from one of its hot wallets, leading to the theft of a basket of assets based on Solana, including SOL, BONK, and several SPL tokens.
Upbit's parent company, Dunamu, covered all financial losses, ensuring that customer funds were not affected.
This event is particularly notable as it occurred on the same day as the major hack in 2019, when attackers stole Ethereum worth 58 billion won (approximately 50 million dollars at that time). Both incidents are widely suspected to be linked to the North Korean group Lazarus Group, which has repeatedly targeted cryptocurrency companies in the region.
Timelines also exacerbated the situation. The hack was discovered just as Dunamu was finalizing a deal to acquire Naver Financial, raising questions about security shortcomings during a major corporate transition.
Regulators act not only because of Upbit, but also due to years of instability in the system in the sector.
Between 2023 and September 2025, the five largest South Korean exchanges recorded 20 system failures, affecting more than 900 users and resulting in total losses amounting to 5 billion won.
This story has intensified calls for stronger consumer protection and the establishment of predictable damage compensation mechanisms, which will allow the crypto market to comply more strictly with national standards of the financial sector.
South Korea has spent the last two years creating a broader legal framework for digital assets, and the new measures represent another step towards tightening oversight.
If the liability rule is adopted, South Korea will become one of the first major jurisdictions requiring crypto exchanges to fully compensate for damages, independent of fault, potentially creating a regional or even global precedent.
The proposals are currently in the refinement stage, where final wording and compliance mechanisms will be structured. Market participants expect further updates in early 2026, as regulators seek to raise security standards, restore investor trust, and prevent a recurrence of recent high-profile violations.
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