South Korea’s Financial Supervisory Service has set out a tougher and more technology-driven approach to crypto oversight for 2026, placing artificial intelligence at the core of market supervision.
In its work plan released on February 9, the regulator said it will increase direct monitoring of digital asset trading, speed up investigations into suspicious activity, and tighten operational rules for exchanges.
The plan also extends beyond crypto markets, introducing stricter penalties for serious IT system failures across the financial sector, reflecting growing concern about technology-driven risks.
According to Yonhap, Korea’s FSS announced its 2026 plan on Feb 9: investigations into high-risk crypto manipulations (whale, containment/ramp schemes, API orders, SNS misinformation) with AI text/surge detection tools; new Digital Asset Basic Act group for phase-2 legislation
AI surveillance moves into crypto markets
The Financial Supervisory Service said it will deploy AI-based systems capable of analysing both trading activity and text signals.
These tools are designed to detect abnormal price movements within minutes and identify groups of linked wallets acting together.
By mapping trading relationships, regulators aim to uncover coordinated behaviour that may distort prices or mislead investors.
The same technology framework will also support early warning systems for fraud and voice phishing by combining telecom and financial data.
Trading behaviour under closer watch
The regulator plans to step up investigations into trading patterns commonly associated with market manipulation.
These include large whale trades that trigger sudden price swings, bulk buying used to pump markets, and sharp price movements linked to exchange deposit or withdrawal suspensions.
Automated API trading will be monitored more closely, alongside false or misleading rumours circulating on social media.
Authorities believe these behaviours often occur together and can undermine fair and transparent price formation in crypto markets.
Bithumb error sharpens regulatory focus
The push for tighter supervision follows an operational failure at Bithumb, South Korea’s second-largest crypto exchange.
During a promotional event, the platform mistakenly transferred 620,000 bitcoins to 249 users, with each recipient receiving assets worth about $166 million on average.
Some users sold the assets, triggering a sudden price drop. Bithumb later recovered most of the funds, retrieving 618,212 bitcoins and 93% of the amount that had been sold.
After the incident, the Financial Supervisory Service confirmed it would investigate potential crypto market manipulation this year, using the case as part of its broader oversight review.
Digital Asset Basic Act and IT enforcement
A dedicated task group has been formed to prepare the next stage of the Digital Asset Basic Act.
The committee will work on token issuance disclosures, trading transparency standards, and licensing guidelines for crypto operators and stablecoin providers.
Exchange fee reporting formats will also be standardised to make real trading costs easier to compare.
Beyond crypto, the plan introduces stricter enforcement on IT risks.
Financial firms involved in serious system failures may face punitive fines, while executives and security officers will carry greater direct responsibility.
Regular vulnerability checks and mandatory security disclosures are being pushed to reduce system-wide risk.
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