In a significant move to combat voice phishing scams, South Korea's financial regulatory bodies have introduced a unified, stringent system for crypto exchanges to manage withdrawal delays. This aims to counter the surge in scams that exploit the speed of transactions.
The Financial Services Commission and the Financial Supervisory Service have announced these new rules, which eliminate the discretion exchanges previously had in allowing users to bypass holding periods, as reported by local news outlets. Previously, exchanges set their own rules for exceptions to maintain fast trading, which fraud groups exploited by coaching victims on how to bypass these rules.
Voice phishing scams typically involve convincing victims to quickly convert cash to cryptocurrency and transfer it within minutes. Even a brief delay can disrupt such scams by giving victims time to reconsider or allowing alerts to be raised before funds are transferred out of an account. Under the new system, exchanges must apply uniform criteria for reviewing withdrawal exceptions, including account history, transaction patterns, and sudden behavioral changes. Officials anticipate that less than 1% of users will qualify for immediate withdrawals.
Additionally, platforms are required to enhance identity verification and closely monitor fund flows. This move signifies a transition from industry-driven safeguards to a nationwide standard. Unlike other markets, such as the U.S. and Europe, where withdrawal holds are common but set by individual companies, South Korea is implementing a centralized approach.
Some exchanges in other markets even allow users to set personal timelocks to prevent unauthorized withdrawals. The South Korean regulators have not immediately responded to requests for further comment.