South Korea's Central Bank Calls for Crypto Trading 'Circuit Breakers'

The Bank of Korea is pushing for cryptocurrency exchanges to adopt "circuit breakers" that would temporarily halt trading during extreme price volatility. The recommendation follows a major incident in February where exchange Bithumb mistakenly distributed over $40 billion worth of Bitcoin to its customers.

The central bank argues the virtual asset sector lacks the internal controls and regulations of traditional finance, making such safeguards necessary. In its payments report, it stated stronger policies are needed to proactively prevent similar errors at other exchanges.

The Bithumb error saw 620,000 Bitcoin, valued at roughly $42 billion, sent to clients instead of 620,000 Korean won (about $400). This triggered a panic sell-off on the platform, crashing the price before trading was suspended. While most transfers were reversed, about $125 million worth of Bitcoin had already been sold, with Bithumb covering the loss from its reserves.

The Bank of Korea says exchanges should be required to have systems that detect and prevent incorrect payments from human error, and to report discrepancies between their internal records and blockchain assets.