South Korea's Crypto Exchanges Found Operating Without Insurance Coverage

Two South Korean cryptocurrency exchanges, Guardian Holdings and CoreDAX, were found to be operating without insurance coverage as of August 14. According to data disclosed by the Financial Supervisory Service (FSS) on September 2, these exchanges had let their previous insurance policies lapse. The policies, which provided 500 million won ($370,000) in coverage for one year, expired last July and were not renewed.

The lack of insurance at Guardian Holdings and CoreDAX raises concerns about the level of protection available to customers in the event of a security breach or system failure. In contrast, the other 26 operators in South Korea have either purchased insurance with coverage of at least 500 million won or set aside internal reserves to cover potential losses.

The FSS has been pushing for stronger consumer protections in the digital asset sector, and this situation underscores the need for more consistent regulatory requirements. The absence of insurance means that customers may have limited recourse to recover their funds if an exchange experiences a hack or other loss.