TechFlow News, April 6: According to Yonhap News Agency, South Korea’s Financial Services Commission (FSC) announced that all domestic cryptocurrency exchanges must establish an asset reconciliation system that cross-checks internal ledgers against actual holdings every five minutes, and such systems must be fully deployed by the end of May.
According to disclosures by the FSC, among the country’s five major cryptocurrency exchanges, three currently perform asset reconciliations only once every 24 hours, while the other two conduct reconciliations at intervals ranging from five to ten minutes. Additionally, regulators identified flaws in the trading circuit-breaker mechanisms (“circuit-breaker switches”) deployed by exchanges when significant asset mismatches occur.
The FSC also mandated that all exchanges publicly disclose their daily asset reconciliation balances and undergo monthly external audits conducted by certified accounting firms. These regulatory requirements will be incorporated into a comprehensive legislative draft targeting the virtual asset market; the South Korean government and the ruling Democratic Party are currently refining and finalizing this draft.
This tightening of regulation was directly triggered by an operational error at Bithumb in February this year—during a promotional campaign, the exchange mistakenly transferred 620,000 bitcoins (BTC) to 249 participating users, causing a brief dip in BTC’s market price. Following the incident, Bithumb froze trading and withdrawal privileges for the affected accounts; most of the erroneously distributed BTC has since been recovered. However, the incident exposed clear vulnerabilities in Bithumb’s internal control systems.
