South Korea Holds Crypto Exchanges to Bank-Level Standards Following Upbit Hack
Introduction of Bank-Level Liability for Crypto Exchanges
South Korea's Financial Services Commission (FSC) is taking decisive action to apply bank-level liability standards to crypto exchanges like Bithumb and Upbit. After a recent hack at Upbit, which resulted in over $30 million being compromised, the FSC is pushing for regulations that will mandate compensation for users impacted by hacks or system failures. These measures aim to strengthen consumer protection within the burgeoning crypto market.
Details on Proposed Regulations
- Mandatory compensation for users affected by hacks.
- Stricter IT security plans for exchanges.
- Potential fines of up to 3% of annual revenue for security breaches.
The current regulatory framework does not require exchanges to compensate users if they are not at fault, a loophole that the FSC aims to close.
Moving Forward with Enhanced Regulations
With fresh concerns surrounding security failures, lawmakers are prioritizing legislation that would impose additional requirements on crypto exchanges, enhancing standards to align more closely with traditional financial institutions. There are calls for greater oversight and accountability, particularly after Upbit's recent operational disruptions that influenced numerous stakeholders within the market.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.