Bank of Korea Proposes Crypto ‘Circuit Breakers’ After Bithumb Bitcoin Error

Highlights:

• Bank of Korea wants crypto exchanges to use circuit breakers after Bithumb’s major payout mistake.
• The central bank said weak controls and slow detection made the Bithumb incident much worse.
• The report also reviewed stablecoin risks, price swings, and global rules shaping safer crypto markets.

South Korea’s central bank wants cryptocurrency exchanges to implement automatic trading pauses, called circuit breakers, to avoid market turmoil like the recent Bithumb incident. The Bank of Korea (BOK) made this suggestion in its Payment and Settlement Report, which was released only on Monday. 

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Officials say that crypto platforms need better internal controls, like the ones that banks and other traditional financial institutions use. They emphasized that without these protections, similar things could happen at other exchanges.

BREAKING 🚨 The Bank of Korea is demanding circuit breakers on crypto exchanges, insisting automatic trading halts to stop extreme price swings.

Exchanges will need to update their systems quickly to comply. 👀 pic.twitter.com/HWWiFgVNPg

— CryptoSavingExpert ® (@CryptoSavingExp) April 13, 2026

What Happened at Bithumb Crypto Exchange

This proposal comes after a major operational mistake at Bithumb, one of the biggest cryptocurrency exchanges in South Korea. In early February, a staff member accidentally sent customers 620,000 Bitcoin instead of 620,000 Korean won during a promotional event. That mistake meant users got about $42 billion in Bitcoin instead of roughly $400 in local currency.

Bithumb reversed most transfers within minutes. However, traders sold around 1,788 Bitcoin, valued at nearly $125 million, before the exchange could react. The company used its own reserves to cover the loss.

BOK Says Weak Controls Made the Damage Worse

The Bank of Korea said the biggest issue was weak internal controls at the exchange. According to the report, Bithumb staff were able to send Bitcoin without supervisor approval or a proper review from internal monitoring teams. The central bank also said Bithumb was slow to notice the mistake. On top of that, its fraud detection system did not work properly during the incident, which made the situation worse.

Under the proposal, exchanges would have to add automated systems to catch human mistakes before payments are sent. For example, these systems could flag unusually large transfers or payment amounts that do not match the actual asset value. At the same time, platforms would need to run real-time checks between their internal records and blockchain data. If any mismatch appears, the system would alert staff right away.

The concept of circuit breakers originates from conventional stock markets. In the Korea Exchange, if prices fluctuate too rapidly, trading is halted momentarily. This pause gives traders time to process information and helps prevent panic-driven crashes. The Bank of Korea believes crypto markets need the same protection.

Central Bank Looks Beyond Crypto ‘Circuit Breakers’

The Bithumb case was just one aspect of the report’s coverage on cryptocurrency. The central bank also looked at crypto market trends last year, talked about stablecoin regulations in major countries, and explored the reasons and lessons behind sharp changes in stablecoin prices on 11 October. 

Bank of Korea said it is conducting its analysis on the crypto market following the implementation of South Korea’s Virtual Asset User Protection Act two years ago. Moreover, it has been actively involved in legislative debates on a won-based stablecoin.

Thus, the central bank’s broader approach clearly indicates that it views the crypto risks from various angles. Apart from the risk related to the exchange mistakes, the central bank is concerned about the volatility of the stablecoin, market infrastructure, and the necessary regulations for establishing a secure payment system in the crypto space.

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