Regulators are considering lifting the offline storage floor from 80%, and some exchanges are already well above it
South Korea’s Financial Services Commission is considering raising the share of customer crypto that exchanges must keep in cold wallets from 80% to about 99%.
If adopted, nearly every coin a Korean trader parks on an exchange would sit offline. That would leave hackers with a much smaller pile to aim at.
What the FSC is weighing
Under current rules, domestic exchanges must hold at least 80% of customer crypto assets in cold storage. That floor comes from the Virtual Asset User Protection Act, which took effect on July 19, 2024.
The proposal under discussion would push the floor up by roughly 19 percentage points. No new mandatory percentage has been finalized. For now, a higher threshold remains a priority under review, not a rule on the books.
Some background on the terms helps here. A hot wallet is connected to the internet, much like the cash drawer at a store register. It is convenient for daily transactions, and it is also the first thing a thief goes for.
A cold wallet is kept offline, closer to a bank vault in the back room. Moving funds out of it takes more time and more steps. That inconvenience is deliberate, since attackers working remotely have a hard time reaching keys that never touch a network.
Today’s 80% rule lets an exchange keep up to one-fifth of customer holdings in the cash drawer. A 99% rule would cut that to about one coin in every hundred.
Why the timing matters
The idea gained urgency after a reported security breach at Binance. According to the research findings, that breach involved unauthorized withdrawals from Binance’s hot wallets totaling approximately $6.3 billion.
On November 2, 2026, the FSC called an emergency meeting with major domestic exchanges and related bodies to review security practices. Topics on the agenda included tighter access controls, refined withdrawal procedures, and stronger protection for user assets.
Getting more customer funds into cold storage was a central focus. The FSC did not set a new binding threshold at that meeting. Instead, regulators pressed for cold storage levels beyond the 80% statutory minimum.
The push did not come out of nowhere. In February 2026, the FSC had already said it would consider moving the cold wallet ratio toward 100% as part of new regulations. The reported Binance incident seems to have accelerated a conversation that was already on the calendar.
Where Korean exchanges stand today
According to end-September 2026 figures, Upbit held 99.17% of customer assets in cold wallets. That is already above the proposed level.
Bithumb reported 94.76% for the same period. That clears the current 80% floor comfortably but sits a few points short of 99%.
Other exchanges showed varying levels of compliance with the 80% rule.
What this means for exchanges and users
For users, the case is straightforward. When less money sits in internet-connected wallets, a single breach has less to steal. A hot wallet compromise at an exchange holding 1% online is a very different event from one at an exchange holding 20% online.
The tradeoff is operational. Exchanges need hot wallet liquidity to process withdrawals quickly. If only about 1% of customer assets are online, a burst of withdrawal requests could force platforms to refill hot wallets from cold storage more often.
Each refill is a manual, security-heavy process. The research findings note that higher cold storage requirements could raise operating costs and, potentially, influence trading fees.
Platforms already near 99% would face little new cost. Smaller exchanges with thinner margins and lower cold storage ratios would need to spend more to comply.
Several things are worth watching from here. First, whether the FSC formally sets a number, and whether it lands at about 99% or moves all the way toward the 100% mark it floated in February 2026. Second, how much time exchanges get to comply, since lower-ratio platforms would need room to restructure their custody setups.
Third, whether the other measures raised at the November 2 meeting, such as access controls and withdrawal procedures, turn into formal requirements. Cold storage limits how much can be stolen. Those controls address how a breach starts in the first place.
South Korea has built one of the more prescriptive custody regimes for crypto exchanges, with a legal cold storage floor in place since July 2024. Lifting it to about 99% would make the rules stricter still.
