South Korea's financial regulator has asked domestic cryptocurrency exchanges to hold a larger share of customer assets in offline cold wallets and strengthen security measures following the October 30 hack of Binance.
The Financial Services Commission (FSC) issued the requests at an emergency meeting on November 2, reaffirmed in a clarification on November 3. Participants included the Financial Supervisory Service, the Financial Security Institute, a crypto industry association, and major virtual-asset businesses.
The four requests cover custody, transfer monitoring, incident response, and financial buffers. The FSC urged exchanges to raise their cold-wallet share, continuously monitor deposits and withdrawals, secure additional response staff, promptly report and share abnormal access attempts, and accumulate additional reserves. The meeting also reviewed controls over computer system access, approval and signing arrangements for wallet withdrawals, and administrator privileges.
The requests build on a custody framework adopted in July 2024, which set the cold-wallet share at 80% of defined economic value and established insurance, mutual-aid coverage, or reserve standards to meet liabilities from hacking or computer failures. The FSC did not specify a new numerical cold-wallet threshold, an additional reserve amount, or exchange-by-exchange implementation results.
The Binance hack, which the FSC dates to October 30, prompted the review. On October 28, regulators began on-site inspections after Bithumb reported signs of an employee-information leak. The November 2 meeting concerned the response to the Binance hack and safeguards sought across domestic operators.
Analysis
Why This Matters
- Directly affects South Korean crypto exchange users: higher cold-wallet share means less customer crypto exposed to online theft, but implementation details remain unspecified.
- Follows one of the largest exchange hacks, setting a precedent for regulatory responses to post-incident cybersecurity demands.
- Signals tightening of crypto custody standards in a major market, potentially influencing other jurisdictions.
Background
South Korea's Financial Services Commission established a crypto custody framework in July 2024, requiring exchanges to hold at least 80% of customer assets in cold storage and maintain reserves for hacking-related liabilities. The October 30 Binance hack prompted the regulator to convene an emergency meeting on November 2, where it issued additional operational safeguards. The meetings also followed an on-site inspection after Bithumb reported a leak of employee information on October 28.
What to Watch
- Whether the FSC issues a revised cold-wallet threshold or specific reserve amounts in follow-up guidance.
- Exchange-by-exchange compliance reports: the current releases do not detail which operators have implemented the requests.
- Any additional regulatory actions arising from the ongoing on-site inspections at Bithumb and possibly other exchanges.
Checked
12 claims in this story checked against 1 source: 11 supported.
Show each claim
- SupportedSouth Korea urged crypto exchanges to increase cold-storage holdings after the Binance hack.CryptoSlate: “South Korea's Financial Services Commission has asked domestic crypto exchanges to keep a larger share of customer assets offline and strengthen their response to suspicious activity after the Binance hack.”
- SupportedThe FSC requested that exchanges raise their cold-wallet share.CryptoSlate: “The FSC urged operators to increase the proportion held in cold wallets”
- SupportedThe FSC requested continuous monitoring of deposits and withdrawals.CryptoSlate: “continuously monitor deposits and withdrawals”
- SupportedThe FSC requested stronger incident response, including additional response staff.CryptoSlate: “secure additional response staff”
- SupportedThe FSC requested that exchanges accumulate additional reserves.CryptoSlate: “and accumulate additional reserves.”
- Reports differThe Binance hack happened on October 30.CryptoSlate: “The FSC dates the Binance hack that prompted the review to Oct. 30.”
- SupportedThe FSC made the requests at an emergency meeting on November 2 and reiterated them on November 3.CryptoSlate: “The regulator's Nov. 3 clarification said it immediately requested the measures at a meeting held at 10 a.m. on Nov. 2.”
- SupportedThe meeting included the Financial Supervisory Service, Financial Security Institute, a crypto industry association, and major virtual-asset businesses.CryptoSlate: “Participants included the Financial Supervisory Service, Financial Security Institute, a crypto industry association, and major virtual-asset businesses.”
- SupportedThe meeting reviewed computer-system access controls, wallet-withdrawal approval and signing arrangements, and administrator privileges.CryptoSlate: “The November meeting also examined controls over access to computer systems, approval and signing arrangements for wallet withdrawals, and administrator privileges.”
- SupportedA July 2024 custody framework set the cold-wallet share at 80% of defined economic value.CryptoSlate: “The FSC's July 2024 supervision-regulation notice set the customer-asset cold-wallet share at 80% of defined economic value”
- SupportedThe July 2024 framework established insurance, mutual-aid coverage, or reserve standards for liabilities from incidents such as hacking and computer failures.CryptoSlate: “The same July 2024 notice established insurance, mutual-aid coverage or reserve standards to meet liabilities arising from incidents such as hacking and computer failures.”
- SupportedRegulators began on-site inspections on October 28 after Bithumb reported signs of an employee-information leak.CryptoSlate: “On Oct. 28, regulators began on-site inspections after Bithumb reported signs of an employee-information leak .”
