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 cryptocurrency exchanges, aiming to align digital asset trading with the stability mechanisms used by the Korea Exchange. Detailed in its annual Payment and Settlement Systems Report released April 13, the BOK suggests that automatic trading halts should be triggered by extreme price volatility or abnormal order flow. The central bank intends for these measures to be incorporated into the upcoming Digital Asset Basic Act. This regulatory push is largely a response to a February incident at Bithumb, where an employee mistakenly entered reward units as BTC instead of KRW. This error effectively created 60 trillion won ($43 billion) in phantom bitcoin, leading to panic selling that crashed the price of BTC on Bithumb by 17% while other global venues remained stable. While major Korean exchanges such as Upbit and Bithumb already utilize price collars and fat-finger checks, the BOK is seeking a more formalized halt system similar to the one employed by the CME Group for bitcoin futures. CME currently halts trading for two minutes if prices move 10% within a 60-minute window. However, the proposal raises questions regarding the practical utility of such halts for a globally traded asset. Because bitcoin trades 24/7 across numerous international platforms like Binance and Coinbase, a localized pause on a Korean exchange would likely result in the price snapping to global market levels immediately upon reopening, potentially neutralizing the intended stability benefits.