South Korea weighs preemptive deposit, withdrawal blocks at exchanges over hack risks

South Korea’s Financial Services Commission said it discussed a plan to allow domestic crypto exchanges to preemptively suspend deposits and withdrawals under certain conditions when a security breach occurs or signs of a possible intrusion, such as abnormal external access attempts, are detected, to prevent user losses from spreading. Under the current Virtual Asset User Protection Act, operators cannot block deposits and withdrawals without just cause, and such measures are allowed only when a hacking incident has clearly occurred. The commission said it plans to issue a non-action opinion so operators can take preemptive steps when hacking or other security breaches are suspected, noting that rapid restrictions are critical to minimizing user losses in crypto security incidents, as seen in cases such as the Binance hack.