Key Takeaways
- •Korean government seeks exchange accountability post-Upbit hack.
- •New rules include strict liability measures.
- •Strengthened compensation for users regardless of exchange negligence.
Regulatory Response to Upbit Hack
South Korean authorities are increasing exchange liabilities, pursuing 'no-fault' rules due to the November 27, 2025, Upbit hack that compromised approximately KRW 44.5 billion in Solana-based assets.
These regulations aim to bolster user protections by mandating compensation for hacking losses, potentially affecting exchange operations and market trust in South Korea's crypto sector.
Details of the Proposed Regulations
The South Korean government intends to implement strict liability rules for cryptocurrency exchanges. These changes were prompted by the November 27, 2025 Upbit hack, where significant sums were stolen from the exchange's hot wallets, necessitating regulatory reforms.
Involved parties include Upbit, Dunamu Inc, and various Korean government agencies. The Financial Supervisory Service and National Office of Investigation are leading efforts to address security weaknesses and enforce liability regulations.
Market and Political Implications
The financial markets have responded to these regulatory developments with heightened security expectations. Implements such as no-fault compensation duties mean exchanges must bolster protections, influencing both business operations and consumer trust in the region.
Politically, this move underscores the government's commitment to align exchange regulations with traditional financial service standards. Social impacts entail an increased expectation for security, leading to improved consumer confidence in the digital asset market.
Financial and Technological Considerations
The proposal outlines changes that could see increased costs for exchanges, impacting profitability. However, the anticipated trust boost might help in maintaining user engagement. Larger exchanges with better capital buffers might better absorb these costs.
Regulatory implications include: potential pressure on smaller exchanges and increased insurance demands. Technological enhancements in security infrastructure are likely, favoring exchanges that proactively address vulnerabilities and invest in security innovations.
A leading exchange cannot lose over a billion coins and wait six hours to report. We must verify whether the fault lies in Solana’s structure or Upbit’s own transaction system.
Representative Kang Min-guk, Member of the National Assembly of Korea
Summary of Exchange Liability Rules
The proposed regulations aim to enforce stricter accountability for cryptocurrency exchanges. Key aspects include:
- •Mandatory compensation for users in case of hacking incidents.
- •Implementation of 'no-fault' liability, meaning exchanges are responsible for losses regardless of their direct negligence.
- •Increased scrutiny of security protocols and operational procedures.