South Korea mulls raising CEX cold wallet requirement to 99% after Binance hack

[sergiorus]

So far only the official source is one of the biggest Korean MSM.

Translated from Korean and summarised via AI:

According to News1, South Korea’s Financial Services Commission is considering raising the minimum cold wallet storage requirement for crypto exchanges from 80% to around 99% following the recent Binance hack.

Upbit reportedly holds over 99% of customer assets in cold wallets, compared with roughly 94% at Bithumb and 85% at Coinone.

Industry participants warn that stricter requirements could delay withdrawals and increase operational burdens, particularly for smaller exchanges.

The proposal remains under discussion and has not been adopted.

Source: https://www.news1.kr/finance/blockchain-fintech/6341324


Perhaps going to become a world standard pretty soon, with withdrawals being processes just a few times a day.

If some OGs remember, during the BitMEX glory days they would process withdrawals only once a day but it was the largest perp exchange in the world back then and at least the users felt somewhat safe about it.

[Chibit01]

This should be a new standard if it's going to help not just with exchanges, but such could also be considered for casinos and any service that holds money in their hot wallet. It might affect withdrawal processing time, but it's better delayed than gone forever, at least since people are so free and find it convenient to be using centralised exchanges as custody they should be ready for what ever pattern that's taken to make sure their funds are secured.

[Oshosondy]

When I read the news in the morning like 10 hours ago, I was thinking if that can be possible. This will make withdrawal to be very slow on the centralized sites.

I think crypto developers should work on onchain rules that can let anyone that generate an address to be able to have just one address rule in a way no other address any coin sent to the certain address the person set can be sent to. This will reduce hacks significantly.

[Yamane_Keto]

Perhaps going to become a world standard pretty soon, with withdrawals being processes just a few times a day.

1% customer assets in a hot wallet is too low and can lead to delays in processing withdrawals and require more interaction with cold wallets, increasing the likelihood of private key leaks. 80% or 90% are reasonable.

[sergiorus]

COINBASE SAYS THEY KEEP OVER 99% OF CUSTOMER FUNDS IN COLD STORAGE, DESCRIBES SAFETY MEASURES IN POST FOLLOWING BINANCE HACK


Source: https://www.coinbase.com/en-gb/blog/how-coinbase-protects-customer-assets


So Coinbase have already adopted this practice.

Industry standard soon?

[348Judah]

COINBASE SAYS THEY KEEP OVER 99% OF CUSTOMER FUNDS IN COLD STORAGE, DESCRIBES SAFETY MEASURES IN POST FOLLOWING BINANCE HACK

I hope they are not just doing this to majorly canvas their users from shifting to other alternatives to hold their assets, we all know what comes after the incident of binance hack and a number of users are beginning to consider for the use of cold storage than the way they fully depend on some of these centralized exchange, who knows who might be the next target for hack, they are only making this public awareness in order to draw the interest of their users so they don't entertain fear of missing out in using them.

[noorman0]

A 99% sounds forced; it would clearly compromise the liquidity of centralized exchanges, and ultimately, it is the users who would bear the brunt of the impact. I would prefer it if the amount of funds held in a hot wallet reflected the reserves set aside to cover the risk of an exploit. If they decide to increase their SAFU reserves, that would automatically enhance the liquidity available for instant withdrawals.

[sunsilk]

Industry standard soon?

Possible. They're going to do these measures in tackling down any potential hack that might bypass them.

They can make these rules as it's also going to make sure that there won't be that much fund will be hacked to them.

And with withdrawals, the slower it goes then the better for the safety but it means inconvenience for users like us as we want these exchanges to be quick in processing it.

We choose what kind of features we would have but I think that there will be a general consensus about more safety.

[bitbollo]

Are they planning some "institutions" that had to verify these data or provide some license?
How you can trust this data since these can't be clearly seen from blockchain?
In Italy providers have to pay expensive licenses before offering crypto services of intermediation...probably this could be another way to keep out of the market small exchanges that can afford these setups.