South Korea to Impose Bank-Level Liability on Crypto Exchanges After Upbit Hack
South Korean regulators announced plans to subject cryptocurrency exchanges to bank-style no-fault compensation rules following a high-profile hack at Upbit that highlighted weaknesses in how digital-asset platforms protect users. The move signals a shift toward treating exchanges with the same liability standards as traditional financial institutions and aims to ensure users are compensated even when fault is hard to assign.
The policy change could force exchanges to hold larger reserves, buy broader insurance, and adopt stricter custody and operational controls, increasing compliance costs and squeezing smaller operators. For users, the measure should improve confidence and reduce loss risk, but it may accelerate industry consolidation as platforms adapt to higher capital and oversight requirements.