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 handling withdrawal delays. This measure aims to counter the escalating surge in scams that exploit the speed of transactions. The Financial Services Commission and the Financial Supervisory Service have announced these new rules, effectively eliminating the discretionary power exchanges previously had to allow users to bypass holding periods, as reported by local news sources.
Previously, cryptocurrency platforms had set their own rules for exceptions to maintain swift trading. However, fraud groups were able to learn and exploit these rules, coaching their victims on how to circumvent them. Voice phishing scams typically coerce victims into converting their cash 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delay can disrupt the scam by giving the victim time to reconsider or allowing alerts to be raised before funds are withdrawn from the account. Under the new regulations, exchanges are required to apply uniform criteria when evaluating exceptions to withdrawal holds. These criteria include account history, patterns of transactions, and any sudden changes in user behavior. It is anticipated that less than 1% of users will be eligible for instant withdrawals.
Additionally, platforms are obligated to enhance identity verification processes and closely monitor the flow of funds. This move signifies a transition from industry-led security measures to a standardized national approach.
In contrast, other markets such as the U.S. and Europe have common practices of withdrawal holds, but these are typically 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 respond to requests for further commentary.