Every 5 Minutes: Korea’s New Rule for Crypto Exchanges

South Korea's financial regulator has mandated that all cryptocurrency exchanges must verify user asset balances every five minutes. This new rule was implemented following a significant overpayment incident earlier this year where Bithumb accidentally sent 2,000 BTC per person instead of 2,000 Korean won during a promotion, resulting in a misallocation of approximately $42 billion. An inspection by the Financial Services Commission (FSC) revealed systemic weaknesses across major Korean exchanges, including infrequent book reconciliation (once every 24 hours for most), lack of automatic trading halt mechanisms, insufficient multi-step approval for high-risk transactions, and inadequate separation of general and high-risk accounts.

The FSC's three-pillar reform package requires automated balance checks with alerts and trading halts for discrepancies, monthly external audits replacing quarterly ones, and public disclosures detailing asset-by-asset blockchain holdings. For manual transactions, exchanges must use separate accounts, implement validity-check systems, and require third-party cross-verification. Additionally, exchanges will need dedicated risk management officers and committees, with compliance checks moving from annual to twice-yearly. The industry body DAXA will finalize self-regulatory amendments this month, with systems to be built by May, and these provisions will be incorporated into Korea's upcoming second-phase Digital Asset Act.

(Source：BeInCrypto)