- South Korea’s FSC plans to issue a conditional no-action letter allowing trading platforms to halt deposits and withdrawals upon suspected hacking, prior to a verified breach.
- The financial authority is also advocating for round-the-clock security surveillance, enhanced cold-storage safeguards, increased compensation reserves, and more rigorous audits.
South Korea’s Financial Services Commission (FSC) is permitting digital asset exchanges to freeze user deposits and withdrawals whenever a cyberattack is suspected, eliminating the requirement to wait for official confirmation that user funds have been compromised.
This initiative was unveiled by the regulator on November 12 following a security gathering in Seoul led by Vice Chairman Shin Jin-chang. The agency intends to issue a no-action letter that grants platforms the ability to enact defensive measures under defined parameters. This step aims to eliminate regulatory ambiguity under current frameworks, which typically forbid exchanges from halting transactions absent valid justification.
JUST IN: South Korea’s Financial Services Commission will allow crypto exchanges to suspend deposits and withdrawals when a hack is suspected, without waiting for a confirmed breach.
The FSC plans to issue a no-action letter permitting exchanges to take preventive measures under specified conditions.
The regulator also plans to strengthen 24/7 security monitoring, cold wallet storage and exchange security inspections.
#SouthKorea #FSC #CryptoRegulation— TheNewsCrypto (@The_NewsCrypto) November 12, 2026
FSC Pushes for 24/7 Monitoring and Stronger Wallet Security
Furthermore, the regulator urges exchanges to sustain 24-hour security observation and incident-response capabilities, matching the perpetual trading nature of the cryptocurrency sector. Platforms are required to ensure qualified personnel are on hand to react swiftly upon spotting abnormally large transfers or other anomalous behavior.
Entities unable to sustain continuous observation protocols will be mandated to handle deposits and withdrawals strictly during operational windows when their security protocols operate as intended. Such platforms must give users advance notice of these active hours and retain sufficient manpower to manage transaction demands.
Additionally, the FSC seeks to raise the percentage of user funds kept in cold wallets, which maintain offline private keys to minimize online vulnerabilities. Existing mandates require a minimum of 80% of user digital assets to utilize this method, though the sector-wide average currently surpasses 95%.
Exchanges are likewise urged to restrict hot-wallet holdings to the lowest levels necessary for daily operations while bolstering insurance policies and monetary reserves to reimburse users impacted by security breaches.
The agency aims to broaden security audits via the Financial Security Institute. Presently, only five out of South Korea’s 28 registered virtual asset firms hold membership. The institute intends to revise its audit criteria tailored to individual exchanges prior to the conclusion of 2026.
In a related development, the forthcoming Digital Asset Law is anticipated to establish IT security requirements and liability provisions for crypto companies that mirror those enforced on conventional banking institutions.
Frequently Asked Questions
Why is the FSC allowing exchanges to suspend withdrawals?
The measure is designed to let platforms take preventive action when a hack is suspected without waiting for official confirmation, clearing up prior regulatory uncertainties regarding transaction blocks.
What are the cold wallet storage requirements for exchanges?
Current regulations mandate that at least 80% of customer crypto assets be stored in offline cold wallets, though the industry-wide ratio already exceeds 95%.
When was this regulatory announcement made?
The FSC announced the measure on November 12 following a security meeting in Seoul chaired by Vice Chairman Shin Jin-chang.
