Bank of Korea Proposes Trading Halts for Cryptocurrency Exchanges

The Bank of Korea (BOK) has recommended the introduction of stock-market-style circuit breakers for South Korean cryptocurrency exchanges. Detailed in its annual Payment and Settlement Systems Report released April 13, the proposal suggests automatic trading halts during periods of extreme price volatility or when abnormal order patterns are detected. The BOK intends for these safeguards to be incorporated into the upcoming Digital Asset Basic Act. The move aims to align crypto trading with the stability mechanisms already employed by the Korea Exchange, providing a structured pause to prevent panic selling and systemic errors. The proposal was prompted by a February incident at the Bithumb exchange. An employee mistakenly entered "BTC" instead of "KRW" for a promotional reward, effectively creating 60 trillion won ($43 billion) in phantom bitcoin. This error led to a 17% price collapse on Bithumb, despite bitcoin maintaining its market value on other global platforms. While CME Group utilizes similar two-minute halts for bitcoin futures during 10% price swings, the BOK's proposal faces practical challenges. Because bitcoin trades globally 24/7, a local halt on exchanges like Upbit or Bithumb may result in significant price gaps when trading resumes, as the assets continue to move on international venues like Binance and Coinbase.