South Korea’s Financial Services Commission (FSC) plans to allow cryptocurrency exchanges to suspend deposits and withdrawals when a hack is suspected, rather than waiting until a security breach is confirmed. On November 12, 2026, the regulator announced it will issue a no-action letter permitting preventive suspensions under specific operational conditions.
Under existing South Korean rules, exchanges are barred from blocking customer withdrawals without legitimate grounds and can only impose restrictions once an attack is clearly established. According to the official FSC regulatory announcement, rapid intervention aims to contain potential fund losses during early-stage threats without granting unrestricted authority to freeze user assets.
The measure forms part of a broader regulatory tightening across the country’s digital asset market. This supervisory push coincides with parallel oversight rules, including mandates to require disclosure of holdings following a surge in complaints against social media promoters.
Operational requirements for local exchanges
Alongside the preventive freeze authorization, the regulator called on exchanges to maintain round-the-clock monitoring and incident response capabilities. The FSC also instructed trading platforms to increase their ratio of cold-wallet storage and strengthen both insurance coverage and financial reserves.
For platforms unable to sustain continuous 24-hour surveillance, the FSC outlined an alternative operational requirement. Those exchanges will only be permitted to process customer deposits and withdrawals during staffed business hours and must notify users in advance of the restricted schedule.
Recent exchange incidents and security audit
The policy shift follows security disruptions at domestic exchanges during October and November 2026. On November 6, 2026, local exchange GOPAX halted trading, deposits, and standard withdrawals after receiving a hacking threat, though a company representative later stated no breach had occurred.
Earlier, on October 24, 2026, trading platform Prabang suspended services after detecting abnormal hot-wallet withdrawals, reporting approximately $70,000 in losses. In October, a nationwide FSC review identified cybersecurity deficiencies at 130 of 555 financial firms, listing GOPAX operator Streami and Prabang among 16 organizations tied to prior security incidents.
These technical safeguards are advancing while South Korea’s crypto tax framework remains under legislative debate. Lawmakers and authorities have separately considered postponing crypto tax implementation of the 22% levy until 2029.
The formal issuance of the FSC’s no-action letter will establish the exact compliance thresholds exchanges must meet to execute preventive freezes without facing regulatory penalties.
This article is for informational purposes only and does not constitute financial advice.
