In a significant move to combat a surge in 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 new system aims to thwart scams that rely on rapid transaction processing. Previously, exchanges had the discretion to allow users to bypass holding periods, but this has been removed.
The new rules, announced by the Financial Services Commission and Financial Supervisory Service, require exchanges to apply consistent criteria when reviewing withdrawal exceptions, including account history, transaction patterns, and unusual changes in behavior. It is anticipated that less than 1% of users will be eligible for instant withdrawals under the new system.
Additionally, exchanges are required to enhance identity verification processes and closely monitor fund transfers. This shift towards a national standard marks a departure from the industry-led approach to safeguards that was previously in place. In contrast to other markets, such as the US and Europe, where withdrawal holds are common but set by individual firms, South Korea's regulatory bodies have taken a more standardized approach.
The regulators' move is expected to have a significant impact on the cryptocurrency industry in the country.