In a significant move to counter voice phishing scams, South Korea's financial authorities have mandated that all local cryptocurrency exchanges implement a uniform, stringent system for delaying withdrawals. This new system aims to prevent fraudsters from quickly exploiting victims. The rules, announced by the Financial Services Commission and Financial Supervisory Service, eliminate the discretion previously held by exchanges to allow users to bypass holding periods, as reported by local news sources. Prior to this, each platform had set its own rules for exceptions, which fraud groups would then use to coach their victims on how to bypass these safeguards.
Voice phishing scams typically involve convincing victims to rapidly convert cash to cryptocurrency and transfer it out of their accounts within minutes. Implementing even a brief delay can thwart these scams by giving victims time to reconsider or allowing for alerts to be triggered before funds are withdrawn.
Under the new regulations, exchanges are required to apply uniform criteria when evaluating exceptions to withdrawal holds, including factors such as account history, transaction patterns, and abrupt changes in user behavior. It is anticipated that less than 1% of users will meet the criteria for immediate withdrawals.
Additionally, platforms are obliged to enhance identity verification processes and closely monitor fund transfers. This development signifies a transition from self-regulation within the industry to a nationwide standard.
In contrast, other markets like the U.S. and Europe have withdrawal holds in place, but these are determined by individual companies, with some exchanges even allowing users to set personal timelocks to prevent unauthorized withdrawals. The South Korean regulatory bodies did not provide immediate comment on the matter.