South Korea’s Financial Services Commission stated that crypto exchanges will soon be permitted to suspend user deposits and withdrawals at the first sign of a security threat, instead of waiting for full verification of a cyberattack. This change is part of a broader initiative aimed at reinforcing the digital asset sector’s security standards after a series of recent incidents.
Regulatory changes address hacking risks
Until now, exchanges in South Korea have been restricted from blocking withdrawals unless a hacking incident had been clearly established, as the current regulations require explicit evidence before any preventive action. The FSC said on Thursday it plans to issue a no-action letter allowing for the suspension of deposits and withdrawals when suspicion arises, provided specific conditions are met.
Regulators are also pressing exchanges to establish 24/7 security monitoring and incident response procedures. Platforms unable to enforce continuous monitoring will be required to restrict deposits and withdrawals to regular operating hours and provide users with prior notification of any changes.
Additional requirements set by the FSC include boosting cold wallet storage for digital assets, increasing insurance and reserve levels, and adopting stricter risk management frameworks for crypto platforms operating in the country.
Recent exchange incidents prompt action
The FSC’s measures come on the heels of several security threats affecting local crypto exchanges. On Friday, the exchange GOPAX halted trading, deposits, and withdrawals after receiving a threat related to hacking activity; the company said it had not confirmed an actual breach. In October, trading platform Prabang paused services after noticing unusual withdrawals from its hot wallet, resulting in a loss valued at approximately $70,000.
The October review by the FSC uncovered cybersecurity weaknesses at 130 out of 555 financial entities examined across the country. The regulatory body highlighted Streami, which operates GOPAX, and Prabang among a group of 16 organizations previously affected by security incidents.
At present, platforms are forbidden from blocking customer withdrawals without solid evidence of a hack, while the new framework would let them act on suspicion, aiming to minimize losses and respond faster to possible threats.
These changes also align with wider government efforts to tighten oversight as digital assets become increasingly integrated into South Korea’s financial system.
Tools for investors navigating exchange security
For investors seeking to track developments at major exchanges during times of heightened security risk, features such as real-time alerts and live news monitoring can be critical. CryptoAppsy caters to this need by allowing users to set smart notifications for rapid updates when leading platforms adjust withdrawal policies or respond to threats, helping traders respond quickly as situations unfold.
