South Korea to Count Crypto in Pensions, BoK Demands Safeguards

South Korea’s Board of Audit and Inspection asked the Ministry of Health and Welfare to treat digital assets as property when assessing eligibility for the country’s basic pension, citing a report on senior welfare system management. The audit said digital assets have clear economic value and noted that the Basic Pension Act does not currently list virtual assets as property, which can allow holders of large crypto balances to qualify for the pension aimed at lower-income seniors.

The audit also said authorities lack statutory power to request customer crypto-holdings data from exchanges. It asked the ministry to set up a legal and technical system that would allow regulators to request and verify exchange-held balances as part of means testing. Ministry officials agreed the law should be revised to prevent pension payments to retirees whose income or assets place them outside the lowest 70% bracket.

The Bank of Korea escalated calls for stronger exchange controls following a February incident at Bithumb in which an employee mistakenly paid out 620,000 Bitcoin as a prize instead of 620,000 won. At the time the erroneous transfer briefly represented roughly $42 billion; the intended payout was about $460. The central bank’s annual payment and settlement report cited weak internal controls as the cause, noting that staff could authorize crypto payouts without superior approval and that exchanges compared internal ledgers with blockchain balances only once per day.

To reduce such risks, the central bank urged crypto platforms to install automated double-verification systems to detect input errors and to develop IT systems that compare internal ledger balances with blockchain wallets in real time to block erroneous transfers. The BoK also recommended considering trading circuit breakers for exchanges, similar to those used on the Korea Exchange, to halt trading during sudden price swings or large abnormal orders. Regulators are reported to be developing a reconciliation system that could confirm ledger and wallet parity within five minutes.

On plans for a domestic digital currency ecosystem, Shin Hyun-song, the Bank of Korea governor nominee, told the National Assembly that a central bank digital currency and commercial bank deposit tokens should be the core infrastructure and expressed support for won-denominated stablecoins. In a written response he said, “I basically agree with the introduction of domestic won stable coins,” and added that maintaining trust in the currency is the top priority. He proposed limiting initial issuance to a consortium of banks with strict customer identification and anti-money-laundering controls, given South Korea’s position outside major reserve currencies.

The audit office requested legal changes to include virtual assets in pension asset calculations and to give regulators access to exchange holdings for verification. The central bank called on exchanges to strengthen technical and operational safeguards to prevent large, erroneous payouts.