South Korea's financial regulator overhauled its crypto exchange rules in March 2026, triggered by a single operational failure: Bithumb accidentally sending billions in Bitcoin to 249 users during a promotional campaign.
Key Takeaways
All crypto exchanges must reconcile assets every 5 minutes by end of May 2026.
Bithumb accidentally sent billions in Bitcoin to 249 users during a promotional campaign.
Corporations gain crypto market access after an 8-year ban.
South Korea’s digital currency pilot enters a new phase with 9 commercial banks.
The catalyst was a damaging operational failure at Bithumb in February 2026, when the exchange mistakenly distributed 620,000 Bitcoin to 249 users during a promotional campaign, representing assets worth billions of dollars at the time.
Bithumb managed to freeze the affected accounts within the same day and recover roughly 99.7% of the funds, but the reputational damage to the sector proved harder to contain. The emergency inspection that followed exposed a glaring inconsistency across the industry: while Upbit had already been reconciling its asset holdings every five minutes, three of the five largest platforms were only running those checks once every 24 hours. That gap in standards is what pushed the regulator to act.
New Operational Requirements Taking Effect by May 2026
The FSC’s new framework mandates that every exchange cross-check its internal accounting ledgers against actual blockchain wallet holdings at five-minute intervals. If a significant discrepancy is detected, an automatic kill switch must immediately halt all transactions and trading activity. Beyond that, exchanges will be required to publish daily reconciliation balances, external audits shift from quarterly to monthly, and every six months platforms must review their internal control systems and report findings directly to financial authorities.
South Korean crypto exchanges currently hold approximately 70 trillion won, around $51 billion, for more than 11 million users. At that volume, a 24-hour reconciliation window is not a procedural gap, it’s a systemic vulnerability.
Corporations Get Market Access After an 8-Year Ban
In a separate but equally significant shift, the FSC has finalized guidelines ending the ban on corporate and institutional cryptocurrency investment that has been in place since 2017. Roughly 3,500 entities, including listed companies and professional investment firms, will be permitted to trade, though with guardrails. Corporate allocations are capped at 5% of a company’s annual equity capital, and trading is restricted to the top 20 cryptocurrencies by market capitalization on regulated domestic exchanges. The guidelines are finalized, but actual trading is not expected to begin until the end of 2026 as firms build out internal governance frameworks.
Meanwhile, a planned 22% tax on cryptocurrency gains, which has already been delayed three times, is now facing calls for complete abolition. The People Power Party introduced a bill to remove digital asset taxation from the Income Tax Act entirely, following reports that an estimated $110 billion has already left South Korean exchanges for offshore platforms to avoid the tax. The 20% capital gains tax is currently scheduled to take effect in 2027, but the opposition Democratic Party is now reviewing the full abolition proposal.
Digital Currency Pilot Moves Into Real-World Testing
On March 18, 2026, the second phase of Project Hangang officially launched, marking a transition from technical validation to live, large-scale deployment. The pilot, which tests a wholesale central bank digital currency issued by the Bank of Korea as a settlement layer, has expanded from seven to nine participating commercial banks, adding Kyongnam Bank and iM Bank to the original group.
For the first time, the system is being used for live government treasury disbursements, with a primary use case being subsidies for electric vehicle charging infrastructure projects. The deposit tokens issued to consumers can be programmed with specific conditions, including usage restrictions, expiration dates, and spending limits, a feature designed to ensure public funds are spent as intended. The project had briefly stalled in mid-2025 due to bank pushback over costs and interest in private stablecoins, but resumed after the Bank of Korea governor secured continued participation.
Regulatory Gaps Remain
Not everything is moving forward on schedule. The Digital Asset Basic Act, the comprehensive “Phase 2” regulatory framework, remains stalled due to a dispute between the FSC and the Bank of Korea over who controls reserve requirements and supervision for stablecoins. The deadlock has also delayed official frameworks for spot crypto ETFs and won-denominated stablecoins. Lawmakers are targeting a potential rollout by late 2026, though that timeline has already shifted before.
The Financial Supervisory Service has also introduced AI-powered monitoring tools capable of detecting unusual price movements or large trades within minutes, alongside new rules that place direct accountability on executives and security officers for serious IT system failures. Major shareholders of crypto exchanges are now subject to regulatory vetting under new licensing rules, a measure aimed at dismantling the concentrated ownership structures that allowed control to bypass internal checks in the first place.
