South Korea Considers Raising Cold Storage Requirements for Exchanges

South Korea's Financial Services Commission has requested that local exchanges increase the portion of customer assets held in cold wallets. This measure comes as a direct response to recent security incidents involving global trading platforms.

The regulatory body also ordered stricter monitoring of transfers and the expansion of incident response teams. Companies must promptly report any attempt at abnormal access to internal systems to prevent capital losses.

The new guidelines require the creation of additional financial reserves to protect users against potential operational failures. Oversight of administrator privileges and approval processes for withdrawals are also on the authorities' review agenda.

Currently, the standard in effect since July 2024 requires that 80% of the economic value of assets remain outside of connected environments. The South Korean government is studying raising this threshold to 99% to mitigate the risks of large-scale cyberattacks.

The sector faces challenges in implementing these changes without hindering the speed of withdrawals. Smaller exchanges may encounter technical and operational difficulties in meeting the new custody and real-time monitoring requirements.