South Korea’s Financial Services Commission (FSC) has announced plans to allow crypto exchanges to freeze withdrawals and deposits when hacking threats are suspected, rather than waiting for confirmed breaches. The move comes amid growing concerns over cybersecurity in the country’s crypto industry, following recent incidents like GOPAX’s precautionary suspension and a $70,000 hot-wallet breach at Prabang.
The FSC will issue a no-action letter permitting preventive suspensions under specific conditions. Current regulations only allow exchanges to restrict withdrawals after a breach is confirmed. The new measures also emphasize 24/7 monitoring, higher cold-wallet holdings, and stronger insurance coverage to bolster security.
Exchanges unable to maintain continuous monitoring will only process deposits and withdrawals during staffed hours, with advance notifications to users. The FSC’s actions follow a review that identified cybersecurity deficiencies at 130 of 555 financial companies nationwide, including GOPAX operator Streami and Prabang.
Recent security incidents include GOPAX’s suspension of services after receiving a hacking threat, though no breach was reported. Meanwhile, Prabang suspended operations after detecting abnormal hot-wallet withdrawals, resulting in approximately $70,000 in losses.