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South Korea crypto enforcers are preparing one of the strictest investor-protection regimes in the World, drafting legislation that would force exchanges to fully compensate users for losses from hacks or system failures without requiring proof of negligence.
This really throws a wrench in my plans of making just enough money passively to hop between Seoul and Tokyo indefinitely and rent an apartment, buy food, and have either a Korean or Japanese GF.
Bummer. The proposal follows the 28M Upbit breach, which exposed a regulatory gap large enough to erode public confidence in the country’s digital asset markets.
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What’s Next For South Korea Crypto? Regulators Push Bank-Level Accountability Into Crypto
The Financial Services Commission plans to introduce no-fault liability rules that mirror South Korean requirements for banks and electronic payment companies. Under the framework, an exchange must repay victims unless the user acted with clear gross negligence, creating automatic and predictable consumer protection.
“System security is the lifeline of virtual asset markets,” said Governor Lee Chan-jin of the Financial Supervisory Service.
🚨BREAKING: 🇰🇷South Korea to impose bank-level liability on crypto exchanges after the Upbit hack.
This would require crypto firms to repay users for hack losses even if they’re not at fault. pic.twitter.com/9rJEerJjKD
— Coin Bureau (@coinbureau) December 7, 2025
The reason for the legislative overhaul is straightforward: crypto exchanges are not subject to the Electronic Financial Transactions Act, meaning regulators lacked the authority to order compensation after the Upbit hack.
CoinDesk data helps illustrate the structural weakness. Between 2023 and September 2025, South Korea’s five largest exchanges reported twenty separate IT incidents. More than 900 users suffered losses exceeding $29 Mn.
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Exchange-level breakdown from regulatory disclosures:
Upbit: six incidents affecting 616 users
Bithumb: four incidents affecting 326 users
Coinone: three incidents affecting 47 users
The November 27 breach alone saw 44.5 billion won in Solana-based assets drained in less than one hour.
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The timing is significant. Korean retail flows have slowed across major centralized platforms this quarter, while global risk assets have been wobbling under shifting Federal Reserve expectations. The lack of spot liquidity across BTC and ETH markets makes regulatory confidence more important for attracting domestic institutional players.
If passed, South Korea’s no-fault liability model would be one of the world’s toughest crypto regimes.
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Key Takeaways
South Korea Crypto is preparing one of the strictest investor-protection regimes in global crypto, drafting legislation …
If passed, South Korea’s no-fault liability model would be one of the world’s toughest crypto regimes.
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