South Korea Tightens Crypto Exchange Oversight with 5-Minute Ledger Checks

South Korea has taken significant steps to strengthen oversight of its cryptocurrency exchanges. The Financial Services Commission (FSC) has issued a directive that requires platforms to reconcile internal ledgers with actual asset holdings every five minutes. This move aims to prevent discrepancies in balances, which can lead to trading halts and potential losses for users.

The FSC's directive comes after an inspection found that three of the country's top exchanges were reconciling balances only once a day, leaving them vulnerable to errors and operational issues. The inspection was prompted by the Bithumb payout incident in February, where 620,000 BTC was mistakenly distributed to users during a promotional event.

Under the new requirements, exchanges must implement automated systems that match internal records with wallet balances on a five-minute cycle. They are also required to define clear thresholds for triggering automatic transaction halts if discrepancies exceed set limits.

The FSC has also introduced measures to improve disclosure requirements, including more detailed reporting of asset balances across both wallets and internal ledgers. Additionally, exchanges must separate high-risk accounts and introduce automated verification tools for payments.