In a significant effort to combat voice phishing scams, South Korea's financial regulatory bodies have mandated that all domestic cryptocurrency exchanges implement a uniform, stringent system for delaying withdrawals. This move aims to counter the surge in scams that exploit the speed of transactions.
The Financial Services Commission and Financial Supervisory Service have announced these new rules, which eliminate the discretion exchanges previously had to allow users to bypass holding periods, as reported by local news outlets. Previously, exchanges had their own rules for exceptions, which fraud groups would learn and use to coach victims on how to bypass them.
Voice phishing scams typically involve convincing victims to quickly convert cash into cryptocurrency and send it out within minutes. Introducing a delay, even a brief one, can disrupt the scam 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 are required to apply uniform criteria when reviewing withdrawal exceptions, including account history, transaction patterns, and sudden behavioral changes. It is anticipated 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-led security measures to a national standard. In contrast to other markets like the U.S. and Europe, where withdrawal holds are common but set by individual firms, South Korea's approach is more centralized.
Some exchanges in other markets even allow users to set their own timelocks to prevent unauthorized withdrawals. The South Korean regulators have not immediately responded to requests for further comment.