South Korea’s Financial Services Commission (FSC) is evaluating a proposal to increase the mandatory cold storage requirement for crypto exchanges from 80% to approximately 99%. This initiative aims to minimize the volume of assets held in internet-connected hot wallets, thereby reducing potential losses from security breaches.
The current 80% threshold was established under the Virtual Asset User Protection Act, which became effective on July 19, 2024. The discussion regarding a higher limit gained momentum following a reported security incident involving unauthorized withdrawals from Binance hot wallets, estimated at $6.3 billion.
On November 2, 2026, the FSC convened an emergency meeting with major domestic exchanges to discuss security practices, including access controls and withdrawal procedures. While no final percentage has been mandated, regulators are actively pushing for levels exceeding the current statutory minimum.
Market data from late September 2026 shows varying compliance levels among major players. Upbit reported holding 99.17% of customer assets in cold storage, while Bithumb reported 94.76%. Smaller exchanges with lower ratios may face increased operational costs if the new threshold is implemented.
The transition to higher cold storage requirements involves manual, security-intensive processes for refilling hot wallets. This operational shift could impact trading fees and require platforms to restructure their custody setups, depending on the final regulatory timeline and requirements.
