In a significant crackdown on phishing scams, South Korea's financial regulatory bodies have mandated that all domestic cryptocurrency exchanges implement a unified, stringent system for delaying withdrawals. This move aims to counter the rising incidence of voice phishing scams that thrive on swift transactions.
The Financial Services Commission and Financial Supervisory Service have introduced these new rules, effectively removing the discretion that exchanges previously had to allow users to bypass holding periods, as reported by local news sources. Previously, each platform had its own set of rules for exceptions to maintain rapid trading. However, fraudsters learned and exploited these rules, coaching their victims on how to bypass them.
Voice phishing scams typically coerce victims into converting their cash into cryptocurrency and transferring it within a short time frame. Even a brief delay can disrupt the scam by providing victims with time to reconsider or allowing alerts to be raised before funds are withdrawn from an account.
Under the new regulations, exchanges are required to apply uniform criteria when reviewing withdrawal exceptions, including account history, transaction patterns, and any sudden changes in user behavior. It is anticipated that less than 1% of users will be eligible for instant withdrawals.
Additionally, platforms must enhance identity verification processes and closely monitor fund flows. This development signifies a transition from industry-driven safeguards to a standardized national approach. In contrast, markets such as the U.S.
and Europe have common withdrawal holds, but these are set by individual companies. Some exchanges even permit users to set their own timelocks to prevent unwanted withdrawals. The South Korean regulators have not responded immediately to requests for further commentary.