In a significant move to combat voice phishing scams, South Korea's financial regulatory bodies have mandated that all domestic cryptocurrency exchanges implement a unified, stringent system for delaying withdrawals. This aims to counter the rising incidence of scams that exploit the speed of transactions.
The Financial Services Commission and the Financial Supervisory Service have introduced these new rules, effectively eliminating the discretion that exchanges previously had to allow users to bypass holding periods, as reported by local news sources. Historically, crypto platforms had established their own rules for exceptions to maintain swift trading. However, fraudsters learned and exploited these rules, coaching their victims on how to bypass them.
Voice phishing scams typically manipulate victims into converting their money into cryptocurrency and transferring it within a short timeframe. Even a brief delay can disrupt the scam by giving the victim time to reconsider or allowing alerts to be raised before the funds are transferred out of the account. Under the new system, exchanges are required to apply uniform criteria when evaluating withdrawal exceptions, including factors such as account history, transaction patterns, and any sudden changes in user behavior. It is anticipated that fewer than 1% of users will be eligible for instant withdrawals.
Additionally, platforms must enhance their identity verification processes and closely monitor fund flows. This move signifies a transition from industry-driven safeguards to a standardized national approach.
In contrast, markets like the U.S. and Europe have common practices of implementing withdrawal holds, but these are set by individual companies.
Some exchanges even offer users the option to set their own timelocks to prevent unauthorized withdrawals. The South Korean regulatory authorities did not immediately provide further comment when contacted by CoinDesk.