The central bank has recommended the adoption of circuit breaker mechanisms similar to those used in stock exchanges for cryptocurrency platforms. This suggestion comes in response to a recent incident where Bithumb mistakenly distributed a massive amount of bitcoins due to an employee’s input error. The error led to a temporary drop in bitcoin prices on the exchange, causing losses for some users.
The Bank of Korea highlighted the lack of robust internal control systems in the crypto asset industry as a key factor behind such operational risks. It noted that compared to traditional financial institutions, cryptocurrency exchanges have weaker controls and lower regulatory standards. The incident at Bithumb was exacerbated by delays in detecting and responding to the error, as the exchange’s fraud detection system failed to operate effectively.
To prevent similar incidents in the future, the central bank emphasized the importance of implementing safeguards akin to the circuit breakers used by the Korea Exchange. These safeguards could help halt trading during abnormal transactions, such as significant order volumes or sudden price fluctuations. The Bank of Korea also stressed the need for real-time IT systems that can automatically verify ledger balances against blockchain data to prevent human errors leading to erroneous payments.
