Crypto Exchanges in South Korea Must Now Check Asset Balances Every Five Minutes
Following an incident at Bithumb that exposed vulnerabilities in risk management and internal oversight, South Korean regulators now require cryptocurrency exchanges to conduct asset verification every five minutes.
Following the discovery of significant gaps in internal oversight mechanisms, South Korean authorities have mandated that all cryptocurrency trading platforms must reconcile their internal accounting records with their actual digital asset holdings at intervals of every five minutes.
This new requirement was made public on Monday by the Financial Services Commission (FSC) following a summit that included representatives from leading cryptocurrency exchanges and the Digital Asset Exchange Alliance (DAXA). During this gathering, participants examined the results of an urgent regulatory inspection that was initiated in response to the Bithumb distribution error incident.
The regulatory inspection revealed that among the nation's five largest cryptocurrency trading platforms, three were conducting balance reconciliations just once daily on a 24-hour schedule, which significantly restricted their capacity to identify and address discrepancies in a timely manner. Additionally, the automated mechanisms intended to pause trading operations when major imbalances occurred were determined to be inadequate, creating concerns about the platforms' preparedness to manage substantial operational errors.
During February, Bithumb erroneously transferred 620,000 Bitcoin (BTC) to a group of 249 users while conducting a promotional campaign. The trading platform subsequently reported that it successfully retrieved 99.7% of the mistakenly distributed digital assets on the same day. The outstanding 0.3%, consisting of 1,788 BTC that users had already converted to other currencies, was compensated through the exchange's own financial reserves.
South Korea mandates five-minute asset checks
According to the newly established regulations, cryptocurrency exchanges operating in the country must deploy automated reconciliation systems that compare ledger records with wallet holdings on a continuous five-minute operational cycle. Additionally, platforms will be obligated to establish clear parameters that would automatically trigger trading suspension mechanisms whenever substantial inconsistencies are identified.
The regulatory changes extend well beyond reconciliation requirements, as authorities are demanding comprehensive reforms to internal operational procedures. Activities classified as high-risk, such as promotional token distributions, will necessitate enhanced oversight protocols, including independent third-party verification processes and multi-tier authorization frameworks. Trading platforms must also implement segregation protocols for high-risk user accounts and deploy automated payment verification technologies.
In addition to these operational changes, the frequency of external auditing procedures will increase from a quarterly schedule to monthly intervals, and disclosure requirements will be enhanced to incorporate comprehensive asset balance information organized by individual wallet addresses and corresponding ledger entries.
The financial authorities and the DAXA plan to complete the rule changes needed to implement the improvement measures within April this year
FSC
Bithumb delays IPO to post-2028
In developments from the previous week, Bithumb revealed that its initial public offering timeline has been pushed back to a period after 2028, representing yet another postponement from the exchange's previous target date of 2025 as the company navigates ongoing restructuring initiatives and heightened regulatory scrutiny. The cryptocurrency platform indicated it intends to concentrate efforts on reinforcing its accounting procedures and internal governance frameworks throughout 2027, having entered into a consulting arrangement with Samjong KPMG.
In related news, Naver Financial has similarly postponed its anticipated share exchange transaction with Dunamu by approximately three months, now scheduling a shareholder voting session for Aug. 18 with an expected completion date of Sept. 30.