South Korea Weighs 3% Revenue Fines for Crypto Exchange Hacks

What Is South Korea Proposing for Crypto platforms?

South Korea is preparing a set of rules that would hold crypto platforms to the identical liability standards as banks, following the recent security incident at Upbit. The Financial Services Commission (FSC) is reviewing a no-fault compensation model that would require platforms to reimburse customers for losses from hacks or system failures even when the platform is not directly responsible, according to The Korea Times.

The model is currently reserved for banks and electronic payment firms under the Electronic Financial Transactions Act. Extending it to crypto would be one of the country’s toughest steps yet in aligning with conventional financial institutions.

The regulatory push follows the Nov. 27 breach at Upbit, , in which more than 104 billion Solana-based tokens were moved to external wallets in under an hour. The transactions were valued at roughly 44.5 billion won ($30.1 million).

Investor Takeaway

Why Are Regulators Pushing Bank-Level Oversight?

Lawmakers are reacting not only to the Upbit breach but to recurring outages across the sector. Data from the Financial Supervisory Service (FSS) shows the country’s five major platforms — Upbit, Bithumb, Coinone, Korbit and Gopax — reported 20 system failures since 2023. More than 900 users were affected, with losses exceeding 5 billion won.

Upbit accounted for six of those failures, impacting 600 customers. The pattern has fueled volumes comparable to large financial firms without matching their resilience standards.

Under the draft measures, platforms may face stricter IT requirements, higher operational benchmarks and tougher penalties for breaches. Lawmakers are weighing fines of up to 3% of annual revenue for hacking incidents — the identical approach used for banks. Current rules cap fines at $3.4 million for platforms, a ceiling critics say fails to deter poor risk management.

Scrutiny intensified later than delays in Upbit’s reporting. Although the hack was detected shortly later than 5 a.m., the platform did not notify the FSS until nahead 11 a.m. Some lawmakers have suggested the timing was to Dunamu’s merger with Naver Financial, completed minutes before regulators received the report. The claim remains disputed, but it has added fuel to the push for hard enforcement rules.

How Would No-Fault Liability Change the Market?

No-fault liability pushes platforms into the identical category as banks and licensed firms, which must compensate users even when breaches occur without negligence. Such rules can reshape operating costs, insurance structures and treasury management for platforms that have historically treated hacks as exceptional events rather than guaranteed liabilities.

For users, the change would provide a securety net that does not exist today. Many Korean traders hold , where platform failures can lead to months-long disputes over reimbursement. Regulators believe automatic compensation rules would close those gaps and reduce the fallout from major incidents.

For platforms, the shift introduces new financial burdens. Firms may need larger reserves, expanded insurance coverage or internal funds dedicated to incident payouts. Compliance teams would face more detailed audits, and governing boards could be held accountable for system reliability in ways not previously required.

Investor Takeaway

What Else Is Moving Through Korea’s Crypto Policy Pipeline?

The liability discussion is not happening in isolation. South Korean lawmakers are pressing financial regulators to produce a draft stablecoin bill by Dec. 10. Officials have faced repeated delays, prompting the ruling party to warn that the legislature may move ahead without the government if the deadline passes.

The plan is to bring the extraordinary session in January 2026. The legislation is expected to set rules for issuance, reserves, disclosures and the handling of redemptions — a structure similar to what global regulators have been studying.

Paired with liability rules, the proposals reflect a broader attempt to pull the sector closer to the standards applied to payment institutions and banks. Korea has been one of the most active jurisdictions in building detailed crypto oversight, and lawmakers appear determined to close remaining gaps exposed by .