South Korea has introduced strict new requirements for cryptocurrency exchanges, ordering them to reconcile internal ledgers with actual asset holdings every five minutes. The directive was issued on Monday by the Financial Services Commission (FSC) following a meeting with leading exchanges and the Digital Asset Exchange Alliance (DAXA). The gathering focused on the results of an emergency inspection that was launched in response to a high-profile payout error at one of the country’s major platforms.
The inspection revealed that three of South Korea’s five largest exchanges were only reconciling their balances once every 24 hours, significantly limiting their capacity to detect and address discrepancies in a timely manner. Regulators also found that systems intended to pause trading when major mismatches occurred were inadequate. These findings raised concerns about how exchanges would manage large-scale operational errors if they arose.
The incident that triggered the review involved Bithumb, which in February mistakenly distributed 620,000 Bitcoin (BTC) to 249 users during a promotional event. The exchange stated it recovered 99.7% of the funds on the same day. The remaining 0.3%, representing 1,788 BTC that had already been sold by recipients, was covered using the company’s own reserves.
Under the new regulatory measures, all exchanges must deploy automated systems that reconcile ledger records against wallet holdings on a five-minute cycle. Platforms will also be required to establish clear criteria for triggering automatic transaction halts whenever significant discrepancies are detected. These technical requirements are designed to ensure faster identification and containment of errors before they escalate.
Regulators are also pushing for broader changes to internal operations beyond reconciliation procedures. High-risk activities such as promotional payouts will be subject to enhanced oversight, including third-party cross-checks and multi-level approval processes. Exchanges must additionally separate high-risk accounts and deploy automated verification tools for payment processing.
On the audit and disclosure front, external audits will shift from a quarterly to a monthly schedule, and exchanges will be required to publish more detailed breakdowns of asset balances by wallet and ledger. The FSC stated that it and DAXA plan to finalize the rule changes needed to implement these improvements within April of this year.
Separately, Bithumb announced last week that it is now targeting an initial public offering after 2028, a further delay from its earlier goal of listing in 2025. The exchange said it will concentrate on strengthening accounting policies and internal controls through 2027, following an advisory agreement with Samjong KPMG. Meanwhile, Naver Financial has pushed back its planned share swap with Dunamu by approximately three months, now aiming for a shareholder vote on August 18 and completion by September 30.
Originally reported by CoinTelegraph.
