KBank, South Korea’s first internet-only bank and the exclusive fiat partner of Upbit, South Korea’s largest crypto exchange, has partnered with Ripple to test its on-chain remittance system.

 

The partnership, according to a local news report, is aimed at leveraging Ripple’s global blockchain infrastructure and network to improve KBank’s international remittance systems, including the speed, cost, and transparency of its services through a proof-of-concept system.

 

 

The proof-of-concept system will test the possibility of KBank moving its cross border remittance system from traditional networks to a faster and cheaper blockchain based system. The process, which has already begun, will involve a two stage verification step.

 

In the first verification stage, which has already been completed, KBank and Ripple examined and verified a wallet app based remittance system. The second stage, which is currently ongoing, will test the stability of the on chain remittance system and will involve the virtual linking of customer accounts to KBank’s internal systems. These accounts will then be used to make on chain transfers to countries such as the United Arab Emirates and Thailand.

 

Although KBank developed its own digital wallet, which was used for the first verification stage, it will leverage Palisade, Ripple’s global SaaS based digital wallet, for the second stage of the proof of concept verification.

 

About KBank 

KBank is South Korea’s first internet only, fully digital bank that operates entirely online without physical branches. It gained prominence in the crypto industry when it became Upbit’s exclusive fiat partner. As a result, every trader who buys or sells crypto on Upbit must move their funds through KBank. In this role, KBank serves as an intermediary between traders and Upbit.

 

Because Upbit is South Korea’s largest cryptocurrency exchange, with a user base of over 13 million, its partnership with KBank had a ripple effect on KBank’s own user base, increasing it from 2 million in 2020 to 15 million by the end of 2025.

 

Apart from its partnership with Upbit, KBank has also been involved in several other crypto related partnerships. Earlier this year, it signed an agreement with UAE based digital asset firm Changer.ae and Korean blockchain company BPMG to build won to dirham stablecoin remittance rails. 

 

KBank has also gone public, completing its initial public offering (IPO) last month, and is now listed on the Korea Composite Stock Price Index, also known as KOSPI.

 

 

The Bank of Korea (BOK), South Korea’s central bank, has proposed the introduction of crypto circuit breakers for domestic cryptocurrency exchanges, months after the Bithumb Bitcoin blunder.

 

In its recently published 2025 Payment and Settlement Systems Report, the bank recommended introducing system-level safeguards similar to the Korea Exchange (KRX) stock market circuit breakers that would automatically halt trading on crypto exchanges, especially during sharp price swings or abnormal transactions caused by large volume or erroneous trades.

 

Referencing the massive payout mishap at Bithumb in February, the BOK argued that this feature would help prevent such incidents from repeating, citing the crypto market’s lack of sufficient safeguards compared to traditional finance. It also suggested including the proposal in South Korea’s pending Digital Asset Basic Act.

 

“The virtual asset industry has inadequate internal control systems and faces weaker regulatory oversight compared to traditional financial institutions,” the bank said.

 

“It is necessary to consider introducing systemic mechanisms such as the Korea Exchange’s circuit breaker, which can block abnormal trades such as large orders or halt trading in the event of sudden fluctuations in virtual asset prices.”

 

Bithumb February Bitcoin Blunder

On February 6, 2026, Bithumb, one of South Korea’s largest cryptocurrency exchanges, was running its routine “Random Box” promotional giveaway. The plan was to distribute small cash prizes totaling 620,000 Korean won (KRW), worth approximately 423 to 460 US dollars, to about 600 qualified users, with each user receiving between 2,000 and 50,000 KRW, or about 1.37 to 34 US dollars.

 

However, the situation escalated when an employee mistakenly entered “BTC” as the currency unit instead of “KRW.” As a result, the system instantly credited approximately 620,000 Bitcoin to users, with each user receiving roughly 2,000 Bitcoin.

 

Bithumb detected the error within minutes and promptly restricted trading and withdrawals on the affected accounts. The exchange was able to recover 99.7 percent of the distributed Bitcoin, while the remaining 1,788 Bitcoin that had already been sold by users were covered by the exchange’s corporate reserves.

 

While the introduction of stock-style circuit breakers for cryptocurrency exchanges appears to be motivated by a desire to protect markets, many experts argue that such measures run counter to the decentralized and borderless nature of cryptocurrency. 

 

Some warn that these guardrails could amplify risks and create price discrepancies between domestic exchanges and global markets. This, in turn, could lead to arbitrage opportunities and confusion, particularly when South Korean exchanges halt trading while the rest of the world continues.

 

 

The Financial Intelligence Unit (FIU), a crime monitoring and prevention body under South Korea’s Financial Services Commission, fined cryptocurrency exchange Bithumb 36 billion won (about $24.5 million) for anti-money laundering (AML) violations.

 

The fine follows an on-site inspection of the exchange conducted by the regulator in March and April last year, which found that Bithumb had violated the Specific Financial Information Act 6.65 million times. The act requires exchanges to restrict transactions with unregistered virtual asset service providers, block suspicious transactions, and verify their customers.

 

Bithumb was also found to have violated the Act on Reporting and Use of Financial Information by facilitating 45,772 cryptocurrency transactions with 18 unregistered overseas virtual asset service providers and cryptocurrency firms. Despite repeated warnings from the regulator, Bithumb failed to take corrective action.

 

"We have continuously requested Bithumb to stop trading with undeclared overseas virtual asset service providers, but it failed to fulfill its legal compliance obligations and demonstrated a markedly insufficient willingness to comply with the law, such as failing to implement effective blocking measures over an extended period," the FIU explained. 

 

In addition to the $24 million fine imposed by the regulator, Bithumb has been ordered to halt all external crypto transfers for new customers from March 27 to Sept. 26. The ban, however, does not affect existing customers trading on the exchange.

 

Despite facing the largest fine ever imposed on a South Korean exchange, Bithumb said it would address the issues highlighted. "We will resolve the issues identified in this inspection and do our best to create a safe trading environment and protect users," the company said.

 

 

South Korea Cracks Down on Compliance Violators

South Korea has been cracking down on compliance violators, particularly cryptocurrency exchanges that breach Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. In November 2025, the country fined its largest cryptocurrency exchange, Upbit, 35.2 billion won (approximately $25 million) and imposed a three-month partial suspension after the exchange failed to comply with AML and KYC rules.

 

On December 31, 2025, the FIU fined Korbit 2.73 billion won ($1.9 million) and issued a stern institutional warning to the exchange’s executives following a compliance audit that revealed weaknesses in its anti-money laundering (AML) and know-your-customer (KYC) procedures.

 

The FIU is currently conducting an on-site review of Coinone, which is expected to conclude later this year. Although there are unconfirmed reports that the agency has already flagged violations, no official report or penalties have been issued.