South Korea's Financial Services Commission is considering raising the mandatory cold-wallet threshold for domestic crypto exchanges from 80% to roughly 99% following a $6.3 billion hot-wallet hack at Binance on October 30, 2026. At an emergency meeting on November 2, regulators pressed major exchanges including Upbit and Bithumb to expand offline storage, strengthen transfer monitoring, and add financial reserves under the Virtual Asset User Protection Act.
Binance hack and response
- ▪A security breach at Binance on October 30, 2026 resulted in unauthorized hot-wallet withdrawals totaling approximately $6.3 billion
- ▪The FBI attributed the October 30, 2026 Binance hot-wallet hack to North Korea's TraderTraitor group
- ▪Binance stated it would cover its $6.3 billion hot-wallet losses from the Oct. 30, 2026 hack using its SAFU fund and corporate reserves
Regulatory emergency meeting on exchange security
- ▪Officials at the November 2, 2026 emergency meeting called by South Korea's Financial Services Commission reviewed access controls for IT systems, withdrawal signing arrangements for hot wallets, and administrator privileges across domestic exchanges
- ▪On November 2, 2026, Financial Services Commission Director General Yoo Young-jun led an emergency meeting with major crypto operators, the Financial Supervisory Service, and the Financial Security Institute
- ▪During the November 2, 2026 emergency meeting called by South Korea's Financial Services Commission, South Korean regulators urged exchanges to increase cold-wallet holdings, monitor transfers continuously, add response staff, report abnormal access, and build extra reserves
Proposals to ease withdrawal halting rules
- ▪South Korea's Financial Services Commission plans to review easing rules on arbitrary withdrawal blocks so cryptocurrency exchanges can restrict withdrawals quickly when a different exchange is hacked
- ▪Cryptocurrency industry representatives requested that South Korea's Financial Services Commission ease limits on arbitrarily halting customer withdrawals when a different exchange is hacked
Virtual Asset User Protection Act requirements
- ▪The Financial Services Commission's July 2024 supervision regulation calculates cold-wallet compliance based on quantities and average won conversion values over the preceding year, while requiring insurance or reserves for failures
- ▪South Korea's Virtual Asset User Protection Act took effect on July 19, 2024, mandating that exchanges keep at least 80% of customer crypto assets in offline cold storage
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