South Korea’s Financial Services Commission: Will allow exchanges to suspend deposits and withdrawals when a hack is suspected
According to Cointelegraph, South Korea’s Financial Services Commission (FSC) plans to allow cryptocurrency exchanges to suspend deposit and withdrawal services when they suspect they have been hacked, without waiting for the intrusion to be confirmed. The FSC said it will issue a no-objection letter allowing exchanges to implement preventive suspensions under specific conditions.
Current rules prohibit exchanges from blocking withdrawals without a valid reason and only explicitly allow restrictions after a hacking incident has been confirmed. The FSC also requires exchanges to conduct 24/7 monitoring and incident response, increase cold wallet holdings, and strengthen insurance coverage and reserves. Exchanges that cannot conduct continuous monitoring may only process deposits and withdrawals during staffed hours and must notify users in advance.
This move follows recent security incidents at South Korean exchanges. GOPAX once suspended trading, deposits, and standard withdrawals after receiving a hacking threat, although a representative said no actual intrusion occurred; Prabang suspended services on October 24 after detecting abnormal withdrawals from a hot wallet and reported losses of about $70,000.
Original sources:
Title: South Korea to Allow Crypto Withdrawal Freezes Over Suspected Hacks
Publisher: Cointelegraph
Publication date: 2026-11-12
URL: cointelegraph.com/news/south-korea-crypto-withdrawal-freezes-suspected-hacks
Source type: cryptocurrency media report
Verification status: The original text was read and cross-checked against the English versions of Crypto Briefing and Yonhap Infomax, confirming that the FSC plans to allow preventive suspensions through a no-objection letter and additional requirements
Supporting content: The FSC plans to allow exchanges to suspend deposits and withdrawals when they suspect they have been hacked, without waiting for confirmation; it will issue a no-objection letter; current rules only allow restrictions after an incident is confirmed; it requires 24/7 monitoring, higher cold wallet holdings, and stronger insurance and reserves; those unable to maintain continuous monitoring may process deposits and withdrawals only during staffed hours and must notify users in advance
ABAB AI Insight
Historically, South Korea’s Virtual Asset User Protection Act restricted exchanges from arbitrarily blocking deposits and withdrawals without a valid reason, and only allowed restrictions after a hacking incident was clearly confirmed. This framework left a response window before an attack was confirmed, and recent cases in which GOPAX suspended services preemptively after receiving a threat, and Prabang reported losses of about $70,000 from abnormal hot-wallet withdrawals, highlight the need for intervention before confirmation.
On the capital path, a no-objection letter allows exchanges to implement preventive suspensions under specific conditions, moving the trigger point from a confirmed intrusion to the suspicion stage. This helps reduce asset outflows during the confirmation process, but it also requires 24/7 monitoring, a higher proportion of cold wallet holdings, and stronger insurance and reserves, concentrating operating costs and compliance responsibilities on platforms capable of continuous monitoring.
In peer comparison, conditions for exchanges to suspend services in other jurisdictions are often tied to confirmed security incidents or regulatory instructions. South Korea’s move to use a no-objection letter rather than immediately amending the law provides a temporary relief path, while at the same time limiting exchanges that cannot maintain continuous monitoring to processing deposits and withdrawals only during staffed hours and notifying users in advance.
Structurally, the power to suspend preventively expands an exchange’s operational room at the suspected stage, but the specific conditions for application have not been detailed in public reports. The actual content of the forthcoming no-objection letter, whether exchanges will broadly use this authority, and the degree to which it aligns with the 24/7 monitoring requirement will determine the practical impact of this adjustment on user fund protection and platform operational continuity.
ABAB News · Cognitive Law
Moving from restrictions after confirmation to suspension upon suspicion shortens the time gap between attack confirmation and asset protection.
A no-objection letter provides a temporary compliance path and does not automatically mean the law has been permanently amended to allow new conditions.
The 24/7 monitoring requirement and the rule limiting processing to staffed hours turn continuous response capability into an operational entry threshold.