South Korea Urges More Cold Storage After Binance Hack
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By Felix Ng and Yohan Yun
South Korea’s Financial Services Commission (FSC) has called on domestic cryptocurrency exchanges to boost the proportion of assets stored in cold wallets following the $6.3 billion Binance hack last week.
Background
Currently, South Korean exchanges are mandated to hold at least 80% of customer crypto assets in cold wallets, but the FSC wants to see an increase in this figure.
Details
In a statement on Monday, the FSC revealed it held an emergency meeting with relevant bodies to assess the impact of the Binance breach on South Korea's crypto market and strengthen security measures.
Key points from the FSC’s statement include:
- Review of security measures: The FSC evaluated exchanges' IT access controls, wallet withdrawal approval processes, signing procedures, and administrator privileges.
- Increase cold wallet storage: The regulator urged exchanges to elevate the proportion of assets stored in offline cold wallets.
- Monitoring and reporting: Exchanges were encouraged to monitor deposits and withdrawals closely, secure additional incident response personnel, and promptly share information about unusual access attempts.
- Additional security measures: Operators were asked to set aside emergency reserves and implement other measures to prevent future breaches.
Context
At the end of September, the cold wallet ratios for major South Korean exchanges varied:
- Upbit: 99.17%
- Bithumb: 94.76%
- Coinone: 85%
- Digital X: 82.79%
- GOPAX: 80.54%
The FSC’s call for increased cold storage comes as the Bank of Korea investigates crypto-related risks, including exchange hacks, among 18 banks and 13 brokerages.
FSC's Continued Efforts
The FSC stated it will continue working with relevant agencies and the industry to prevent further attacks and limit potential damage.