South Korea Advances No-Fault Liability for Crypto Exchanges

South Korean financial regulators are advancing strict no-fault liability rules for cryptocurrency exchanges, requiring them to compensate users for losses from hacks or system failures regardless of the platform's fault, in response to a major breach at the nation's largest exchange, Upbit, last month.

The Financial Services Commission announced plans to incorporate these measures into upcoming virtual asset legislation, aligning crypto platforms with standards already applied to banks and electronic payment firms under the Electronic Financial Transactions Act. The push follows a November 27 incident at Upbit, operated by Dunamu, where hackers transferred more than 104 billion Solana-based tokens, valued at approximately 44.5 billion won or about 32 million U.S. dollars, to external wallets over 54 minutes. The breach occurred between 4:42 a.m. and 5:36 a.m. Korea Standard Time, with the stolen assets moved at a rate of roughly 13.7 million won per second.

Financial Supervisory Service Governor Lee Chanjin highlighted the incident's severity during a recent press conference, stating, "The hacking is not something we can overlook. However, regulatory oversight clearly has...