The Bank of Korea is pushing to install stock-style circuit breakers on the country’s cryptocurrency exchanges, a proposal that would subject crypto to the same trading shutdown rules used by the Korea Stock Exchange.
The recommendation appears in the central bank’s annual report on payment and settlement systems, released April 13, and calls for an automatic shutdown when cryptocurrency prices fluctuate sharply or abnormal orders arrive. The central bank said the rules should be incorporated into the future basic law on digital assets.
The catalyst for this policy suggestion came from an incident at Bithumb in February, when an employee offering a promotion entered the reward unit using the name “BTC” instead of “KRW”, distributing approximately 60 trillion won ($43 billion) in phantom bitcoin before supervisors detected the error 20 minutes later. Panic selling caused BTC on Bithumb to fall by 17%, while the token continued to trade at market prices on other sites.
Upbit, Bithumb and the three other licensed Korean exchanges already use high-speed matching engines with price collars and integrated finger controls. CME Group runs a similar system on Bitcoin futures, halting trading for two minutes when prices move 10% in a 60-minute window.
The more difficult question is whether shutdowns would work, given the global nature of BTC trading. If Upbit shut down for 20 minutes, bitcoin would continue to trade on Binance, Coinbase and dozens of others – and Upbit’s price would adapt to changes in global markets when it reopens.
Circuit breakers are a familiar tool of traditional finance, a visible signal that markets are under control. But crypto doesn’t have a single way to stop, and the problems regulators are trying to solve don’t exactly match price volatility.
