Korea’s central bank: Cryptocurrency trading should introduce a “circuit breaker” mechanism; CBDC should be the digital core

In its annual Payment and Settlement report released on April 13, the Bank of Korea (BOK) recommended introducing a Circuit Breaker mechanism similar to that used in stock markets to the crypto asset industry, to prevent abnormal transactions and human error. On the same day, BOK Governor nominee Shin Hyun-soon said in a written statement submitted to a parliamentary personnel hearing that the central bank’s digital currency (CBDC) and commercial banks—based on the deposit tokens they issue—should become the core of the digital currency ecosystem.

Circuit Breaker Proposal: The Bithumb Mispayment Incident Exposes Structural Vulnerabilities

In the report, the Bank of Korea used this year’s February incident at the Bithumb exchange as a starting point to explain the urgency of introducing stricter risk-control mechanisms to the crypto industry. In that incident, when employees of Bithumb paid activity bonus rewards, they mistakenly set the payment unit to Bitcoin instead of Korean won, resulting in the actual distribution of 620k Bitcoins (about 60 trillion won) rather than the 620k won–equivalent amount in Bitcoins that should have been issued—the difference before and after amounts to tens of trillions of won. The Bank of Korea’s analysis indicated that this incident revealed three key structural vulnerabilities:

The Three Structural Vulnerabilities Behind the Bithumb Mispayment Incident

Lack of an Upper-Level Approval Process: Employees can carry out digital asset transfers on their own without obtaining upper-level approval or confirmation from a monitoring department

Insufficient Ledger Reconciliation Frequency: The exchange checks only once per day the internal ledger and blockchain wallet balances, making it impossible to detect anomalies in real time

Lack of an Anomaly Interception Mechanism: There are no systematic measures to proactively detect and block excessive limits or abnormal transfers before trades are executed

To address the above issues, the Bank of Korea proposed three improvement directions: building a dual-confirmation system to intercept human error; developing an IT system that can automatically reconcile ledgers and blockchain balances in real time; and introducing a Circuit Breaker mechanism similar to that in stock markets, which would automatically pause trading when large abnormal orders or sudden, severe volatility occurs in crypto asset prices.

New Governor Nominee: CBDC’s Core Position and Staged Openness for Stablecoins

In its written statement, Governor nominee Shin Hyun-soon laid out a systematic position on the digital currency ecosystem. He stated clearly that the CBDC and commercial banks’ deposit tokens, based on the tokens they issue, should serve as the foundation infrastructure of the digital currency framework.

On the issue of Korean won stablecoins, Shin Hyun-soon said he fundamentally supports introducing them, believing that in the future stablecoins can coexist with deposit tokens in a “complementary and competitively viable” way. However, on the issue of issuing entities, he argued for a cautious phased approach to opening—because Korea is not a reserve-currency country, regulatory compliance capability is crucial. Therefore, he suggested first allowing alliances centered on banks to issue Korean won stablecoins, with non-bank entities able to participate, and then gradually expanding later.

He also stated explicitly that crypto assets, including stablecoins, cannot meet the three core functions of money (unit of account, medium of exchange, store of value), and therefore fundamentally cannot replace existing fiat currencies.

Plan for the 2027 Offshore Korean Won Settlement System

The Bank of Korea also announced that it plans to officially launch an offshore Korean won settlement system in 2027, using real-time gross settlement (RTGS) to replace the current delayed net settlement (DNS) method, in order to effectively reduce credit risk and improve payment reliability. The new system will be built independently from the existing large-value payment infrastructure, “BOK-Wire+ (Bank of Korea Financial Network),” to maintain the latter’s functional stability. It is currently undergoing connection testing and preparation for business continuity planning.

Frequently Asked Questions

Why does the Bank of Korea recommend that the crypto industry introduce a Circuit Breaker mechanism?

In its annual report, the Bank of Korea used the February 2026 Bithumb misissuance of 620k Bitcoins (about 60 trillion won) as an example. It pointed out that the crypto industry has structural vulnerabilities such as lack of upper-level approval, insufficient ledger reconciliation frequency, and no abnormal interception mechanism, and recommended introducing a Circuit Breaker mechanism to block abnormal transactions.

What is the position of the Bank of Korea’s new governor nominee on CBDC and stablecoins?

Shin Hyun-soon believes that the CBDC and deposit tokens should be the core of the digital currency ecosystem. He is broadly supportive of Korean won stablecoins, but argues that issuance should prioritize alliances centered on banks. At the same time, he emphasized that crypto assets cannot replace fiat currencies, and he takes a reserved view on claims that blockchain can improve foreign-exchange efficiency.

What are the features of the offshore settlement system the Bank of Korea plans to roll out in 2027?

The new system adopts real-time gross settlement (RTGS), with each transaction completing final settlement in real time. This can eliminate the credit and liquidity risks inherent in the current delayed net settlement approach. At the same time, it will be built independently from the existing BOK financial network to ensure the functional stability of both systems.