South Korea Plans Crypto Transaction Freezes on Hacking Suspicion

South Korea’s Financial Services Commission plans to let cryptocurrency exchanges temporarily suspend deposits and withdrawals when they suspect hacking, before an attack is confirmed. The regulator says it will issue a no-action letter permitting preventive freezes under specified conditions, alongside stronger expectations for exchange security.

The letter is intended to address uncertainty under current rules, which prohibit exchanges from restricting customer transactions without legitimate grounds and explicitly allow suspensions when a hacking incident is established. The FSC’s plan would provide regulatory assurance for temporary action based on suspicion, but would not grant exchanges unrestricted authority to freeze funds. The final conditions have not been detailed in the reports, leaving the scope of the permitted suspensions to be defined.

The FSC also called for exchanges to maintain continuous security monitoring and respond to suspicious activity. Platforms unable to monitor around the clock would have to process deposits and withdrawals during staffed hours and notify customers in advance. The commission said exchanges should keep only the funds needed for...