South Korea Bank Recommends Crypto Circuit Breakers

South Korea's central bank has recommended that cryptocurrency exchanges implement circuit breakers to halt trading during extreme price swings, following a major operational error at Bithumb that triggered a brief but severe market disruption earlier this year.

The Bank of Korea outlined the proposal in its annual payment and settlement report released on April 13. The incident in question occurred in February, when Bithumb, one of the country's largest crypto platforms, mistakenly distributed 620,000 bitcoin as rewards to users instead of the intended 620,000 Korean won, equivalent to about 419 U.S. dollars. The erroneous transfer, valued at roughly 42 billion dollars at the time, stemmed from a staff input error that bypassed required approvals and monitoring systems.

Users who received the unexpected bitcoin quickly sold portions of it, leading to a flash crash in the bitcoin-Korean won trading pair on Bithumb. The price dropped sharply, reaching as low as 55,000 dollars per bitcoin in a localized 17 percent decline within minutes. The exchange's fraud detection system failed to activate promptly, allowing the anomaly to persist for about 20 to 40 minutes before trading was...