Korea’s FSC requires exchanges to set up an asset reconciliation system every 5 minutes, to be deployed by the end of May

Gate News message, on April 6, the Financial Services Commission (FSC) of South Korea announced that all cryptocurrency exchanges operating within the country must establish an asset-matching system to reconcile internal ledgers with actual holdings every 5 minutes, and complete the deployment by the end of May. According to disclosures by the FSC, among the five major exchanges, three still perform asset reconciliations on a 24-hour cycle, while the other two reconcile on a frequency ranging between every 5 and 10 minutes. In addition, the regulator found that, when large-scale asset mismatches occur, the trade halt (circuit breaker) mechanisms at various exchanges have certain shortcomings. The FSC also requires that all exchanges publish their daily asset-matching balances and undergo monthly external audits by accounting firms. The relevant regulatory requirements will be incorporated into a comprehensive legislative draft for the virtual asset market, and the South Korean government and the ruling Democratic Party are currently refining and improving the draft. The immediate trigger for this tightening of regulation was an operational mistake at a South Korean exchange in February this year— the exchange mistakenly sent 620,000 bitcoins (BTC) to 249 users participating in a promotional campaign, causing the bitcoin price to dip briefly. Afterward, the exchange froze the trading and withdrawal permissions of the related accounts, and most of the mistakenly sent BTC has been recovered, but the incident revealed clear vulnerabilities in its internal control system.