After Historic Binance Hack, South Korea Considers 99% Cold Wallet Rule for Crypto Exchanges

While a tougher cold storage rule could protect customer assets from hackers, smaller exchanges may struggle to process withdrawals quickly. Last week’s Binance security breach was the most devastating attack in crypto history. It exposed the risks facing exchanges and the customers who trust them with their assets. The incident has now prompted South Korean regulators to reconsider how much customer money exchanges should keep in offline storage. The latest reports suggest that discussions are underway to raise the existing requirement significantly. Cold Storage Rule According to News1, the Financial Services Commission held an emergency security meeting with major virtual asset exchanges and custody firms to examine ways to strengthen asset protection. Under the existing Virtual Asset User Protection Act, exchanges are required to keep at least 80% of customer assets in cold wallets, which remain disconnected from the internet, while the rest can be held in hot wallets to facilitate withdrawals and other transactions. However, regulators are now discussing whether the minimum should be brought closer to 99%, a level already maintained by some major platforms. The proposed change...