South Korean financial regulators are reportedly considering introducing much stricter cryptocurrency storage requirements for local exchanges following the massive $6.3 billion Binance hack.
According to a Nov. 3 report by South Korean news outlet News1, the country’s Financial Services Commission (FSC) is discussing raising the minimum proportion of customer cryptocurrencies that exchanges must store in cold wallets from the current 80% to approximately 99%.
The potential regulatory change comes just days after Binance, the world’s largest cryptocurrency exchange, suffered one of the biggest security breaches in cryptocurrency history.
However, the proposed 99% threshold remains under discussion, and no official decision has been made.
South Korea considers tougher crypto security rules
Under South Korea’s existing Virtual Asset User Protection Act, cryptocurrency exchanges are required to store at least 80% of customers’ digital assets in cold wallets.
Unlike hot wallets, which are connected to the internet and used to process everyday transactions, cold wallets are kept offline, making them significantly less vulnerable to remote hacking attacks.
However, the proportion of assets stored offline varies significantly among South Korea’s leading cryptocurrency exchanges.
According to Financial Supervisory Service data cited by local media, Upbit currently has one of the highest cold wallet storage ratios in the country.
As of the end of September, the exchange held approximately 99.17% of customer assets in cold wallets.
Meanwhile, rival cryptocurrency exchange Bithumb stored approximately 94.76% of its assets offline, while Coinone’s cold wallet ratio stood at 85%.
