South Korea’s Financial Services Commission (FSC) has announced plans to allow crypto exchanges to temporarily freeze withdrawals and deposits when hacking threats are suspected, rather than waiting for confirmed breaches. The move comes in response to recent security incidents, including GOPAX’s precautionary suspension of services and a $70,000 hot-wallet breach at Prabang. The FSC will issue a no-action letter permitting these preventive measures under specific conditions, marking a shift from current rules that require clear evidence of a hack before restrictions can be imposed.
The regulator also emphasized the need for 24/7 monitoring and incident response systems, higher cold-wallet holdings, and stronger insurance coverage. Exchanges unable to maintain continuous monitoring will be required to process deposits and withdrawals only during staffed hours and must notify users in advance. These measures aim to bolster the security of South Korea’s crypto industry, which has faced increasing cybersecurity challenges.
Recent incidents highlight the urgency of these changes. On Friday, GOPAX suspended trading and withdrawals after receiving a hacking threat, though no breach was confirmed. Earlier, Prabang reported a $70,000 loss due to abnormal hot-wallet withdrawals. The FSC’s review of 555 financial companies identified cybersecurity deficiencies in 130, with GOPAX and Prabang among 16 firms involved in earlier security incidents.