In South Korea, crypto trading isn’t a niche activity. It’s part of daily life for millions of people who buy, sell, and hold digital assets through local exchanges. When something goes wrong, it's felt quickly by everyday users, not just professional traders.
That reality is now pushing regulators to step in more forcefully, as concerns grow around market manipulation, weak systems, and how easily prices can be influenced in fast-moving crypto markets.
Oyinebiladou Omemu
Regulators Focus on Market Manipulation
South Korea’s Financial Supervisory Service, known as the FSS, has made it clear that crypto markets will face closer supervision going forward. In its 2026 policy roadmap, first reported by Yonhap News, the agency said it plans to crack down on unfair trading practices that distort prices and harm investors. This includes targeting large traders who move markets through coordinated buying or selling, as well as tokens that suddenly spike in price even when trading has been suspended on exchanges.
The FSS is also paying closer attention to automated trading tools. Officials have raised concerns about the use of API based orders and other automated strategies that can pump prices quickly, leaving ordinary investors exposed when prices fall just as fast. The regulator’s goal is to make sure prices reflect real demand, not artificial activity designed to mislead the market.
Social Media Misinformation Comes Under Scrutiny
Beyond trading behavior itself, South Korean regulators are now looking closely at how information spreads online. The FSS said it will investigate the use of false or misleading information shared through social media and online communities to influence token prices. These campaigns can create hype around little-known assets, drawing in retail investors who may not understand the risks.
Officials have stressed that market trust depends not only on technology but also on fair information. The agency said stopping manipulation and false signaling is essential to protecting investors and maintaining confidence in digital assets as the market continues to grow.
Bithumb Error Raises Alarms Over System Failures
Regulatory pressure has also increased following a major operational error at Bithumb, one of South Korea’s largest crypto exchanges. During a promotional event, Bithumb mistakenly transferred around 620,000 bitcoin to hundreds of users, an amount valued at tens of billions of dollars at the time. While the exchange later recovered about 99.7 percent of the funds, the incident triggered serious concerns about internal controls and system safety.
Following the Bithumb incident, South Korea’s Financial Supervisory Service Governor Lee Chan‑jin said the error “shows the structural problems of electronic systems for virtual assets” and stressed that unresolved technical and control issues must be addressed for digital assets to be considered part of mainstream finance.
Alongside enforcement efforts, South Korea is preparing for a broader legal framework for digital assets. FSS has set up a task force to support the upcoming Digital Asset Basic Act. This group is working on rules around token issuance disclosures, exchange listings, and licensing requirements for crypto businesses.
The law is expected to bring a clearer structure to the industry, covering areas such as stablecoins and exchange operations. Regulators have said the aim is not to shut down crypto activity, but to reduce high-risk behavior and give both companies and users clearer expectations. The final version of the legislation is expected in the first quarter of 2026.
Henry Chikwem
