Stricter Regulations Proposed in Response to Major Hack
South Korea's Financial Services Commission (FSC), in collaboration with the National Assembly, is advancing amendments to the Electronic Financial Transactions Act. This seeks to impose fines up to 3% of annual revenue on virtual-asset exchanges.
The proposed regulations target security breaches like the 2025 Upbit hack, which involved Solana tokens. Strict liability and system reliability standards will align exchanges with bank-level regulations. These proposals respond to security lapses affecting major exchanges.
Fines Could Reshape Exchange Security and Compliance
The potential fines aim to enhance trust in the digital asset market, prompting exchanges to bolster security measures. South Korean exchanges face increased compliance costs, potentially leading to higher operational budgets or capital reserves to manage liabilities.
Current paradigms in countries treating institutions as strictly liable for breaches could reshape virtual asset security protocols. If adopted, this regulatory change could influence global crypto oversight trends, echoing measures in banking regulatory frameworks.
"The current limits of penalties under existing law do not suffice; we need stricter enforcement tools." — Lee Chan-jin, Governor, Financial Supervisory Service (FSS)
Past Hacks Drive Stricter Security Regulations in Korea
The 2019 Upbit ETH hack set a precedent by exposing vulnerabilities in systems not covered by stringent no-fault liabilities. This history underscores the shifting regulatory landscape towards more robust consumer protection measures.
Analysts at Kanalcoin predict these changes may tighten Korea's crypto industry, possibly limiting new entrants while strengthening market resilience. Data comparisons suggest improved safeguards benefiting long-term investor confidence and institutional involvement.