The post South Korea mulls strict no-fault crypto hack compensation law appeared on BitcoinEthereumNews.com.

South Korea plans no-fault rules forcing crypto exchanges to fully reimburse users for hacks and IT failures, echoing bank-style protections. Summary New rules would make Korean exchanges fully compensate users for losses from hacks or system failures, unless customers showed gross negligence.​ The move follows repeated IT incidents, including a rapid Solana asset drain at Upbit, and aims to close gaps in current electronic transaction laws.​ If adopted, regulators say this no-fault regime would be among the world’s toughest crypto consumer-protection frameworks. South Korean regulators are drafting legislation that would require cryptocurrency exchanges to fully compensate users for losses from hacks or system failures without requiring proof of negligence, according to government officials. The Financial Services Commission plans to introduce no-fault liability rules that mirror South Korean requirements for banks and electronic payment companies, the agency announced. Under the proposed framework, an exchange must repay victims unless the user acted with clear gross negligence. South Korean exchanges succumb to new rules The proposal follows a breach at Upbit, one of the country’s largest exchanges, which exposed gaps in the current regulatory framework. “System security is the lifeline of virtual asset markets,” said Lee Chan-jin, Governor of the Financial Supervisory Service, in a statement. Cryptocurrency exchanges currently are not subject to the Electronic Financial Transactions Act, meaning regulators lack the authority to order compensation after security incidents, according to regulatory analysts. Between 2023 and September 2025, South Korea’s five largest exchanges reported twenty separate IT incidents affecting more than 900 users, according to CoinDesk data. Upbit reported six incidents affecting 616 users, Bithumb reported four incidents affecting 326 users, and Coinone reported three incidents affecting 47 users, the data showed. A November 27 breach resulted in Solana-based assets being drained in less than one hour. Korean retail trading flows have slowed…

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Filed under: News - @ December 8, 2025 4:28 pm