South Korea has decided to tighten rules for cryptocurrency platforms after a major breach at Upbit that sent shockwaves through the local market and government halls.
The government is pushing the rules at the level of banks
According to government and industry reports, the November 27, 2025 Upbit breach involved the transfer of approximately 104 billion tokens across the Solana network in approximately 54 minutes.
The value of the tokens was estimated at around 44.5 billion won, or around $30 million to $36 million. Upbit has said it will cover customer losses with its own funds, but officials say current law does not require exchanges to automatically reimburse users.
The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have begun drafting rules that would require virtual asset service providers to meet bank accountability standards, requiring mandatory compensation for customers affected by hacks or system outages.
Image: Phongphan Supphakank/stock.adobe.com
Past failures put pressure on regulators
Reports have revealed that Korea’s five largest exchanges – Upbit, Bithumb, Coinone, Korbit and Gopax – were cited in official data showing 20 system outages between 2023 and September 2025.
These incidents affected more than 900 users and caused cumulative losses of around 5 billion won. Regulators say these past problems, along with Solana’s recent transfers, have exposed gaps in consumer protection and operational stability that current rules do not address.
Exchanges face higher costs and fines
Under the proposed measures, exchanges would have to meet stricter IT security and retention standards, undergo regular audits and maintain clearer recovery plans.
Sanctions are also being rethought. Current maximum fines were set at 5 billion won in previous regulations; the new plans would include fines of up to 3% of an exchange’s annual revenue for serious violations.
This type of exposure could push companies to increase their spending on security and insurance, and could change how they price their services.
What this means for users and markets
Industry analysts say imposing mandatory compensation would boost consumer confidence. This is the stated objective. But rebuilding trust will likely take time.
Some exchanges have already promised voluntary payments after the Upbit incident, but a legal requirement would mark a significant shift in how crypto platforms are treated compared to banks and electronic payment companies under the Electronic Financial Transactions Act.
Chronology and legislative stages
Based on the reports, the draft rules are currently under internal review within the FSC and will need to go through formal legislative processes before becoming law.
Lawmakers and regulators are debating exactly what parts of banking rules should apply to crypto companies and how to avoid stifling competition or innovation while still protecting customers.
Featured image from Unsplash, chart from TradingView
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