South Korea’s Financial Services Commission has directed domestic cryptocurrency exchanges to move a larger share of customer assets offline and fortify security protocols following the major breach at global exchange Binance. The regulator issued the directives during an emergency meeting held on November 2, convened alongside the Financial Supervisory Service, the Financial Security Institute, industry associations, and major virtual-asset businesses. The immediate regulatory intervention was prompted by the October 30 cyber incident targeting Binance, which exposed widespread vulnerabilities across global digital asset platforms.
To mitigate potential spillover risks, the regulator outlined four primary mandates for local operators: increasing the proportion of crypto assets stored in offline cold wallets, conducting continuous monitoring of deposit and withdrawal activities, deploying additional emergency response personnel, and immediately reporting abnormal system access attempts. Furthermore, exchanges were instructed to accumulate additional financial reserves to shield users from potential security failures. Alongside these directives, regulators conducted thorough inspections of system access controls, multi-signature withdrawal approvals, and administrator privileges to ensure end-to-end security over asset movements.
The newly requested safeguards build upon South Korea’s existing legal framework established in July 2024, which requires operators to maintain at least 80 percent of customer crypto assets in cold storage and hold insurance or reserve funds for potential hacking liabilities. While the Financial Services Commission did not set new numerical targets or disclose individual exchange compliance levels in its follow-up release on November 3, officials emphasized that immediate adherence is crucial. The emergency measures follow recent on-site regulatory inspections at local exchange Bithumb over a suspected employee data leak, reflecting a broader effort by Korean authorities to enforce strict operational standards and safeguard investor funds across the domestic digital asset sector.
