In a significant effort 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 move aims to counter the surge in scams that exploit the speed of transactions. The Financial Services Commission and Financial Supervisory Service have introduced these new rules, eliminating the discretion previously allowed to exchanges to bypass holding periods for certain users, as reported by local news outlets. Previously, each platform had its own set of rules for exceptions, which fraud groups would learn and use to coach their victims on how to bypass these safeguards.
Voice phishing scams typically involve convincing victims to quickly convert cash into cryptocurrency and transfer it, often within minutes. Implementing a delay, even a brief one, 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 regulations, exchanges are required to apply uniform criteria for evaluating 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 processes and closely monitor fund flows. This shift towards a national standard marks a departure from the previously industry-led approach to safeguards. In contrast to other markets like the U.S.
and Europe, where withdrawal holds are common but determined by individual companies, some exchanges even allow users to set personal timelocks to prevent unauthorized withdrawals. The South Korean regulators have not provided further comment on this development at the time of request.