South Korea's top financial regulator has announced a major policy shift aimed at bolstering digital asset security across the nation. According to statements released on Thursday, the Financial Services Commission (FSC) intends to permit domestic cryptocurrency trading platforms to halt both deposits and withdrawals preemptively whenever a cyber threat or hacking attempt is suspected, rather than forcing operators to wait until an actual security breach is fully confirmed.
Under existing regulations, digital asset platforms in the country are strictly prohibited from restricting client withdrawals without clear, legitimate grounds. Current laws explicitly mandate that such actions can only be taken after a security breach has already been established. To change this, the FSC announced it will issue a formal no-action letter that authorizes these preventive suspensions under specific conditions, providing platforms with the legal flexibility to protect user funds in high-risk scenarios.
This regulatory adjustment directly responds to a series of recent security vulnerabilities within the domestic market. On Friday, local crypto platform GOPAX instituted a precautionary suspension affecting trading, deposits, and standard withdrawals after receiving a direct hacking threat. Although a company representative subsequently clarified that no actual network breach had occurred, the incident underscored the urgent need for flexible precautionary measures. Earlier in the autumn, on October 24, trading platform Prabang had to halt its operations entirely following the detection of unusual hot-wallet outflows, which ultimately resulted in approximately $70,000 in losses.
Beyond allowing preemptive suspensions, the regulatory body is tightening oversight across the sector. The FSC has urged operators to maintain round-the-clock incident response monitoring, increase their cold-wallet storage allocations, and reinforce both financial reserves and insurance coverage. Furthermore, the agency stipulated that any exchange failing to provide continuous 24-hour monitoring must restrict deposit and withdrawal operations strictly to staffed business hours while notifying users in advance.
These heightened supervisory measures follow a broader national review conducted in October, during which the FSC uncovered cybersecurity deficiencies across 130 out of 555 evaluated financial entities nationwide. The regulator previously flagged the operators of GOPAX, known as Streami, alongside Prabang among 16 entities connected to earlier security incidents. Meanwhile, as digital asset oversight tightens in our dedicated crypto section, local lawmakers are concurrently considering postponing the implementation of a proposed cryptocurrency tax until the year 2029.
