South Korea’s FSC to let exchanges pause deposits and withdrawals when hacks are suspected
South Korea’s Financial Services Commission plans to allow cryptocurrency exchanges to suspend deposits and withdrawals when a hacking incident is suspected, rather than waiting for a breach to be fully confirmed. The move is designed to give operators room to act sooner if suspicious activity suggests assets may be at risk.
The regulator said it will issue a no-action letter reported by CoinDesk, a form of regulatory assurance that would reduce the risk of sanctions for exchanges that take preventive steps under specified conditions. Under the current framework, platforms can restrict customer transactions only when a hacking incident is clearly established.
The change appears aimed at closing the gap between the first signs of a possible attack and the point at which a breach is formally confirmed. In that window, exchanges may see unusual transfers or unauthorized access attempts, but existing rules have left less clarity over whether they can freeze activity immediately.
Security response before confirmation
According to secondary reporting, the FSC said rapid intervention can help limit further losses when an exchange faces a possible cyberattack. The planned letter would allow preventive suspensions, but it would not give exchanges unrestricted authority to freeze customer funds.
The same reporting says the regulator is also pressing exchanges to strengthen monitoring and response procedures, including round-the-clock oversight and personnel capable of investigating suspicious transactions quickly. In some cases, platforms that cannot maintain continuous surveillance could be required to limit deposits and withdrawals to staffed operating hours, with advance notice to users.
The proposal follows a series of security incidents that have kept exchange safeguards in focus in South Korea. Reported cases include precautionary service suspensions at GOPAX and a hot-wallet breach at Prabang, both of which added pressure for clearer rules on emergency action.
