The Bank of Korea has called for stronger regulations in the country’s cryptocurrency market, including the introduction of circuit breakers, following the major operational error at Bithumb.
BOK pushes for circuit breakers to control human errors
The Bank of Korea (BOK) stated on Monday the need for a circuit breaker similar to those seen in the stock markets to regulate the crypto space. The decision came in due to the recurring cases similar to the fat-finger incident at the local crypto exchange, Bithumb.
Bithumb mistakenly sent about 620,000 BTC,$43 billion worth of bitcoin to hundreds of users. Reports claim that the incident shows the weakness in the internal controls and risk management.
The mistake was reportedly caused by a staff member entering the reward unit as BTC (Bitcoin) instead of KRW (Korean won). However, the exchange found the error in 20 minutes of the incident, failing to prevent the bitcoin transfer from being moved or sold, impacting the users.
“To prevent this from happening at other exchanges, related regulations need to be strengthened,” the BOK wrote.
$43 billion fat-finger error triggers market disruption
The incident triggered immediate market disruption, with the BTC-KRW trading pair on the platform increasing about 15% and causing losses for users.
The term fat-finger was used in the industry to express a mistake where the person accidentally enters a massive order causing repercussions they never saw coming. In the crypto world, fat-finger errors are especially dangerous because blockchain transactions are generally irreversible.
Some of the very famous cases of such errors include Paxos, the issuer of PayPal’s stablecoin (PYUSD), accidentally minted $300 trillion worth of tokens due to an internal technical input error.
However, the company identified the “ghost” tokens early, and burned them within 30 minutes before they could impact the market.
One of the most expensive typos in the history of trading was the case of Bitfinex in 2021, where a trader at Bitfinex accidentally paid a $23.7 million fee in Ethereum to send just $100,000. Fortunately, the miner who processed the transaction, returned most of the funds.
Regulation expected in upcoming crypto framework
The central bank also called on lawmakers to incorporate such protections into the forthcoming Digital Asset Basic Act, which is expected to establish a comprehensive regulatory framework for South Korea’s crypto industry.
BOK stated that the exchanges should be required to adopt a system to detect and quickly shoot down such concerns over errors by adopting a market- wide security feature like the circuit breaker, meant to block abnormally large orders or even temporarily stop trading when the crypto market experiences a sudden fluctuation.
Meanwhile, Bithumb has sought a court order to freeze 7 BTC that remains unrecovered. In the aftermath of the incident, the exchange has come under intensified scrutiny from local authorities and has postponed its IPO plans to 2028.
The Bank of Korea has called for stronger regulations in the country’s cryptocurrency market, including the introduction of circuit breakers, following the major operational error at Bithumb.
BOK pushes for circuit breakers to control human errors
The Bank of Korea (BOK) stated on Monday the need for a circuit breaker similar to those seen in the stock markets to regulate the crypto space. The decision came in due to the recurring cases similar to the fat-finger incident at the local crypto exchange, Bithumb.
Bithumb mistakenly sent about 620,000 BTC,$43 billion worth of bitcoin to hundreds of users. Reports claim that the incident shows the weakness in the internal controls and risk management.
The mistake was reportedly caused by a staff member entering the reward unit as BTC (Bitcoin) instead of KRW (Korean won). However the exchange found the error in 20 minutes of the incident, failing to prevent the bitcoin transfer from being moved or sold, impacting the users.
“To prevent this from happening at other exchanges, related regulations need to be strengthened,” the BOK wrote.
$43 billion fat-finger error triggers market disruption
The incident triggered immediate market disruption, with the BTC-KRW trading pair on the platform increasing about 15% and causing losses for users.
The term fat-finger was used in the industry to express a mistake where the person accidentally enters a massive order causing repercussions they never saw coming. In the crypto world, fat-finger errors are especially dangerous because blockchain transactions are generally irreversible.
Some of the very famous cases of such errors include Paxos, the issuer of PayPal’s stablecoin (PYUSD), accidentally minted $300 trillion worth of tokens due to an internal technical input error.
However, the company identified the “ghost” tokens early, and burned them within 30 minutes before they could impact the market.
One of the most expensive typos in the history of trading was the case of Bitfinex in 2021, where a trader at Bitfinex accidentally paid a $23.7 million fee in Ethereum to send just $100,000. Fortunately, the miner who processed the transaction, returned most of the funds.
Regulation expected in upcoming crypto framework
The central bank also called on lawmakers to incorporate such protections into the forthcoming Digital Asset Basic Act, which is expected to establish a comprehensive regulatory framework for South Korea’s crypto industry.
BOK stated that the exchanges should be required to adopt a system to detect and quickly shoot down such concerns over errors by adopting a market-wide security feature like the circuit breaker, meant to block abnormally large orders or even temporarily stop trading when the crypto market experiences a sudden fluctuation.
Meanwhile, Bithumb has sought a court order to freeze 7 BTC that remains unrecovered. In the aftermath of the incident, the exchange has come under intensified scrutiny from local authorities and has postponed its IPO plans to 2028.
