The Bank of Korea is urging lawmakers to require crypto exchanges to implement circuit breaker mechanisms capable of halting trading during sudden price swings, citing the market disruption caused by Bithumb‘s erroneous Bitcoin distribution in February. The central bank published the recommendation in a payments report on Monday, framing the incident as evidence that the crypto industry lacks the internal controls that regulated financial institutions are required to maintain.
Bithumb Sent 620,000 Bitcoin Instead of 620,000 Korean Won
In early February, Bithumb erroneously credited customers with 620,000 Bitcoin, worth approximately $42 billion at the time, instead of the intended 620,000 Korean won, worth around $400. Users who received the unexpected Bitcoin began selling immediately, pushing the price of Bitcoin on Bithumb sharply lower and triggering a broader panic-sell that amplified the drop further.
Bithumb halted trading and reversed the erroneous sends within minutes. However, by the time the exchange intervened, 1,788 BTC worth approximately $125 million had already been sold. Bithumb covered the resulting shortfall using company reserves, recovering approximately 99.7% of the overpaid Bitcoin.
Central Bank Recommends Automated Halts and Real-Time Asset Checks
The Bank of Korea’s report drew a direct comparison to the trading curbs used by the Korea Exchange in traditional securities markets, where circuit breakers automatically suspend trading when prices move beyond defined thresholds. The central bank said equivalent mechanisms should be introduced for crypto exchanges to prevent future incidents driven by human error or operational failure.
Beyond trading halts, the bank recommended that exchanges be required to maintain systems capable of detecting erroneous payments before they reach users, and that platforms automatically verify their internal asset records against on-chain data to flag discrepancies in real time. The report stated: “Currently, the virtual asset industry lacks internal control mechanisms and faces lower regulatory intensity compared to established financial institutions.”
The Bank of Korea added that similar incidents could occur at other exchanges and that strengthening relevant regulations in advance was necessary to prevent them.
Recommendations Land as South Korea Moves to Expand Crypto Regulation
The Bank of Korea’s report arrives as South Korean lawmakers are actively working to broaden the country’s crypto regulatory framework. Proposed legislation covers areas including stablecoin foreign exchange rules and real-world asset trust requirements, and the central bank is pushing for its circuit breaker and error-detection recommendations to be incorporated into that broader effort.
South Korea is one of the world’s most active retail crypto markets. The scale of the Bithumb incident — a single operational error temporarily flooding the market with the equivalent of billions in Bitcoin — illustrated the systemic risk that can emerge when high-volume platforms lack automated safeguards. The central bank’s proposals would, if enacted, bring crypto exchange oversight closer to the standards applied to licensed securities trading venues in the country.
