South Korea is preparing to impose bank‑style, no‑fault liability rules on cryptocurrency exchanges after a large breach at Upbit. The Financial Services Commission (FSC) is reviewing measures that would require exchanges to reimburse customers for losses from hacks or system failures regardless of the platform’s fault, officials and market analysts told The Korea Times.
No‑fault compensation already applies to banks and electronic payment providers under the Electronic Financial Transactions Act. The change follows a Nov. 27 incident at Upbit, operated by Dunamu, when more than 104 billion Solana‑based tokens — roughly 44.5 billion won (about $30.1 million) — were moved to external wallets in under an hour.
Regulators have also flagged repeated outages. Data the Financial Supervisory Service (FSS) submitted to lawmakers show South Korea’s five major exchanges — Upbit, Bithumb, Coinone, Korbit and Gopax — reported 20 system failures since 2023, affecting over 900 users and producing more than 5 billion won in combined losses. Upbit alone recorded six failures that affected roughly 600 customers.
Proposed reforms would tighten IT security requirements, raise operational standards and increase penalties. Lawmakers are considering a penalty structure that could fine exchanges up to 3% of annual revenue for hacking incidents, aligning the threshold with banks; exchanges currently face a maximum fine of about $3.4 million.
The Upbit breach also prompted scrutiny over delayed reporting. Although the incident was detected shortly after 5 a.m., Upbit did not notify the FSS until nearly 11 a.m. Some lawmakers allege the reporting delay was intentional and note it occurred minutes after Dunamu completed a merger with Naver Financial.
Separately, lawmakers are pressuring regulators to produce a draft stablecoin bill by Dec. 10 and have warned they will advance the legislation without the government if that deadline is missed. Officials aim to bring a bill to debate during the National Assembly’s extraordinary session in January 2026.