All cryptocurrency exchanges in South Korea will soon be required to verify their virtual asset holdings every five minutes. Exchanges must also build systems that automatically halt trading when significant discrepancies emerge between book figures and actual holdings.
The Financial Services Commission (FSC) announced these measures as the backbone of its "Cryptocurrency Exchange Institutional Reform Plan" on Tuesday. The move is a follow-up to the Bitcoin overpayment incident at Bithumb in early February.
Under the new rules, exchanges must check the number of virtual assets on their books against actual holdings at five-minute intervals. Most exchanges have been verifying their balances only once a day, a structure that inevitably delays detection of erroneous payments. If a significant gap is found between ledger and actual figures, exchanges must have computer systems in place to immediately trigger a kill switch that blocks trading.
Audits of crypto asset balances, previously conducted quarterly by accounting firms, will now be required monthly. Exchanges must also disclose holdings by blockchain and by ledger. Until now, exchanges have refused to reveal their crypto holdings, citing trade secrets.
Virtual assets distributed manually — such as event rewards — must be managed in separate accounts. Exchanges must also build a "validity check" system that blocks transactions when input units or total amounts deviate significantly from pre-set distribution plans. Third-party cross-verification at the payment input stage will also become mandatory. Most exchanges currently lack such internal controls, meaning unauthorized crypto disbursements can effectively be made with the approval of a single employee or department head alone.
Financial authorities and the Digital Asset Exchange Alliance (DAXA) plan to finalize self-regulatory revisions this month. They also aim to complete building IT systems for real-time balance reconciliation by next month. The authorities said they will incorporate these measures into the second phase of virtual asset legislation currently under discussion in the National Assembly.