South Korea’s central bank has called for the introduction of circuit-breaker systems in the virtual asset market to enhance safeguards against extreme volatility and operational failures. The recommendation appears in the Bank of Korea’s latest Payment and Settlement Trends report, released on April 13, 2026. It draws directly from a detailed examination of a high-profile error at Bithumb, one of the country’s largest cryptocurrency platforms, earlier this year.
The incident occurred on February 6, 2026, during a routine promotional payout.
A Bithumb employee accidentally selected bitcoin as the unit instead of Korean won when distributing event rewards.
As a result, roughly 620,000 bitcoins—valued at approximately 60 trillion won (around $44 billion)—were credited to users.
Although the exchange recovered most of the funds, the episode revealed serious gaps in risk management.
Detection took about 20 minutes, and full response required another 20, allowing abnormal selling activity to spread and amplifying market disruption.
Bank of Korea analysts concluded that the root problem was not merely human error but a fundamental lack of internal controls.
Staff could authorize large asset transfers without supervisor approval or independent oversight.
In addition, the platform reconciled its internal ledgers with actual blockchain wallet balances only once daily.
This daily cycle created a structural vulnerability. That’s because the exchange’s books could temporarily reflect holdings far beyond its real reserves, enabling “ghost” assets to enter circulation.
The central bank noted that such weaknesses stand in sharp contrast to the tighter controls enforced at traditional banks and securities firms.
To prevent recurrences, the Bank of Korea proposes several targeted improvements. First, exchanges should adopt dual-verification protocols that automatically flag input mistakes before any transfer executes.
Second, they must implement real-time information-technology systems to continuously match internal records against on-chain balances.
Most importantly, the central bank recommends installing circuit-breaker mechanisms modeled on those used by the Korea Exchange in the stock market.
These automated halts would suspend trading during suspicious large-volume orders or sudden price swings, limiting systemic contagion and protecting overall market stability.
The proposal arrives as lawmakers and regulators continue shaping a Digital Asset Basic Law.
Officials have already required exchanges to perform balance checks every five minutes and install emergency stop features following the Bithumb case.
The Bank of Korea’s suggestions build on these steps, emphasizing proactive, market-wide tools to align cryptocurrency trading with the standards of TradFi.
Proponents argue that stronger safeguards will reduce operational risks, curb excessive volatility, and boost public confidence in digital assets. Critics, however, worry that overly rigid circuit breakers could stifle liquidity in a 24/7 market. Still, the central bank maintains that effective adoption of these systems is essential to address the vulnerabilities exposed by innovation in digital finance and crypto-assets.
