Which country tightened CEX liability?

TLDR

South Korea tightened centralized exchange (CEX) liability.

1. Regulators plan bank?level, no?fault customer compensation for hacks or system failures per a new proposal (report).
2. The move sits within a broader AML crackdown including Travel Rule expansion and stricter penalties, with legislation targeted for early 2026 (update).

Deep Dive

1. No?Fault Compensation

South Koreas Financial Services Commission is reviewing rules to hold exchanges to the same liability standards as banks, requiring compensation for user losses even when the platform isnt at fault (report). This push followed the late?November Upbit breach and includes tougher penalties, with fines discussed up to 3% of annual revenue (market coverage).

Japan is also moving toward tighter liability by planning mandated liability reserves for exchanges to cover unauthorized outflows, signaling a regional shift in consumer protection expectations (policy note).

2. AML and Governance Tightening

Koreas Financial Intelligence Unit has escalated enforcement, including suspensions and fines, and is preparing to expand the Travel Rule to smaller transfers while tightening ownership and account?freezing powers (update). Lawmakers target the first half of 2026 for legislative amendments, aligning crypto platforms with traditional financial sector obligations.

Conclusion

South Koreas shift to bank?level liability standards for exchanges ties recent security incidents to stronger consumer protections. The combination of no?fault compensation and tighter AML rules could raise operating costs yet improve trust. Watch for formal legislation and implementation timelines, as these rules would reshape CEX risk management and user safeguards.