• Upbit’s cold storage upgrade to 99% significantly reduces hot wallet exposure to under 1%, surpassing Korea’s 80% legal mandate.

• The policy responds directly to the Solana token theft, where hackers drained funds in under an hour, highlighting vulnerabilities in hot storage.

• Regulators are pushing bank-level liability rules, requiring exchanges to compensate users for hack-related losses, even if not directly at fault, per Financial Services Commission discussions.

Discover how Upbit’s 99% cold storage ratio bolsters crypto security post-Solana breach. Explore regulatory shifts and stablecoin rules in South Korea’s evolving market. Stay informed on protective measures today.

What is Upbit’s New Cold Storage Policy After the Solana Breach?

Upbit’s cold storage ratio now stands at 99%, a proactive measure implemented by operator Dunamu to safeguard customer assets following the late-November Solana-related security incident. This policy shifts the vast majority of funds to offline storage, minimizing risks associated with online hot wallets. By doing so, Upbit not only complies with but exceeds South Korea’s regulatory requirements, setting a benchmark for industry-wide security practices.

The breach, which saw hackers exploit vulnerabilities to drain multiple Solana-based tokens in under an hour, prompted this swift response. Previously, Upbit maintained over 98% of its assets in cold storage, but the incident underscored the need for even tighter controls. Dunamu announced that hot wallet exposure would be reduced to less than 1%, ensuring that only minimal funds remain accessible for daily operations. This adjustment positions Upbit ahead of many global peers, including platforms like Coinbase and OKX, which typically hold lower cold storage percentages.

Experts in cryptocurrency security, such as those from the Blockchain Security Alliance, have praised this move as a “gold standard” for exchanges facing increasing cyber threats. The policy’s implementation involves advanced multi-signature protocols and regular audits to verify the integrity of offline holdings, providing users with greater peace of mind in an era of frequent hacks.

Source: Dunamu

The exchange’s current holdings, valued in the billions, are now predominantly secured in geographically distributed cold storage facilities, which are immune to internet-based attacks. This level of protection aligns with best practices recommended by cybersecurity firms like Chainalysis, which report that over 70% of major exchange hacks in the past year targeted hot wallets.

How Are South Korean Regulators Responding to Crypto Exchange Breaches?

South Korea’s Financial Services Commission (FSC) is actively reviewing a new framework for bank-level liability standards in the cryptocurrency sector, inspired by traditional financial institutions. This proposed regulation would mandate that exchanges compensate users for losses from hacks or system failures, regardless of direct fault, marking a significant step toward enhanced consumer protection. According to FSC statements, the initiative follows a series of incidents, including Upbit’s recent Solana breach, and aims to foster trust in the digital asset market.

The framework draws parallels to how banks handle fraud under existing laws, where reimbursement is standard even for sophisticated cybercrimes. Data from the Korea Internet & Security Agency indicates that crypto-related losses in the country exceeded $200 million in 2025 alone, prompting urgent regulatory action. Experts, including financial analyst Kim Soo-hyun from the Korea Economic Research Institute, note that “this liability shift could reduce user hesitancy and encourage broader adoption of cryptocurrencies.”

Implementation details are still under discussion, but the FSC has emphasized collaboration with exchanges to ensure compliance without stifling innovation. The review process includes public consultations and stress tests on platforms like Upbit to simulate breach scenarios, ensuring the rules are practical and effective.

In parallel, lawmakers are accelerating efforts on stablecoin regulations. Reports indicate that financial regulators have been urged to draft a bill by December 10, with the National Assembly prepared to proceed independently if delayed. The proposal, expected for the January 2026 session, addresses whether banks can issue won-backed stablecoins, a topic debated in recent meetings. Regulators confirmed no final decisions yet, but both parties agree on the need for swift action to integrate stablecoins into the economy safely.

This regulatory momentum reflects South Korea’s position as a global leader in crypto oversight, with policies that balance innovation and security. The stablecoin framework could introduce licensing requirements and reserve audits, similar to those in the European Union’s MiCA regulation, to prevent risks like those seen in past stablecoin depeggings.

Frequently Asked Questions

What triggered Upbit’s decision to increase cold storage to 99%?

Upbit raised its cold storage ratio to 99% in direct response to a late-November breach involving Solana-based tokens, where hackers stole millions in under an hour. Operator Dunamu cited the incident as a critical wake-up call, aiming to eliminate hot wallet vulnerabilities and protect over 98% of assets already offline.

How will bank-level liability rules impact South Korean crypto users?

Bank-level liability rules, under FSC review, will require exchanges to reimburse users for hack losses, even if not at fault, much like traditional banking protections. This enhances security for everyday traders by shifting responsibility to platforms, potentially lowering insurance costs and boosting market confidence through mandatory compensation funds.

Key Takeaways

• Enhanced Security Post-Breach: Upbit’s 99% cold storage ratio sets a new industry benchmark, reducing exposure to cyber threats and exceeding Korea’s 80% requirement.
• Regulatory Evolution: Incoming bank-level liability standards will compel exchanges to prioritize user compensation, mirroring protections in conventional finance and addressing rising hack incidents.
• Stablecoin Progress: Lawmakers’ push for a won-backed stablecoin framework by early 2026 could integrate digital assets more deeply into South Korea’s economy, with banks potentially playing a key issuance role.

Conclusion

Upbit’s bold step to a 99% cold storage ratio after the Solana breach, combined with South Korea’s advancing bank-level liability standards and stablecoin regulations, signals a maturing crypto landscape focused on security and accountability. As regulators finalize these frameworks, exchanges must adapt to safeguard user assets amid growing threats. Investors should monitor these developments closely, as they pave the way for a more resilient digital economy in the coming years.