South Korea Weighs No-Fault Liability for Cryptocurrency Operators

New Liability Structure: South Korea is proposing a no-fault liability framework for virtual asset operators, aligning penalties with those of financial institutions, which could result in fines of up to 3% of annual sales revenue for hacking incidents.

Regulatory Shift: The legislation aims to enhance user protection and system reliability in the crypto sector, reflecting a significant shift in responsibility for virtual asset service providers (VASPs) similar to existing regulations for banks.

Impact on Exchanges: Major Korean exchanges like Upbit, Bithumb, and Coinone may need to adjust their operational strategies and increase capital and insurance requirements due to the new financial accountability measures.

Investment in Security: Analysts predict that the no-fault liability regime will lead to greater investment in security infrastructure across virtual asset platforms, improving risk management and cyber resilience in the crypto industry.