South Korea’s Bank of Korea has proposed introducing “circuit breaker” mechanisms for crypto exchanges following a major operational error at Bithumb that exposed vulnerabilities in the sector’s risk controls. The recommendation comes as regulators seek to strengthen oversight and prevent similar incidents in the rapidly growing digital asset market.
In a recent payments report, the central bank urged lawmakers to consider safeguards similar to those used in traditional financial markets, where trading is automatically paused during extreme volatility. According to the Bank of Korea, such measures could help contain sudden price swings and limit systemic risks triggered by operational mistakes or market shocks. The proposal reflects broader concerns that the crypto industry still lacks the robust internal controls commonly found in established financial systems.
The call for reform follows a high-profile incident in February, when Bithumb mistakenly transferred approximately 620,000 Bitcoin to users instead of 620,000 Korean won. The error, valued at around $42 billion at the time, triggered a sharp and temporary collapse in Bitcoin’s price on the platform as users rushed to sell the unexpected funds. Although the exchange halted trading and reversed most transactions within minutes, about 1,788 BTC had already been liquidated, forcing the company to absorb losses using its own reserves.
The Bank of Korea emphasized that such incidents highlight the need for stronger safeguards, including automated systems capable of detecting erroneous transactions before they are executed. It also recommended real-time reconciliation tools that compare internal exchange balances with blockchain data to quickly identify discrepancies.
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