In a significant move to curb the rising incidence of 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 initiative aims to counter scams that exploit the speed of transactions.
Previously, exchanges had the discretion to allow users to bypass holding periods, but this has been removed in favor of a standardized approach. The new rules, announced by the Financial Services Commission and Financial Supervisory Service, require exchanges to apply uniform criteria when considering exceptions to withdrawal holds, including factors such as account history, transaction patterns, and any sudden changes in user behavior. It is anticipated that less than 1% of users will meet the criteria for instant withdrawals under this new system.
Furthermore, exchanges are required to enhance their identity verification processes and closely monitor the flow of funds. This shift towards a national standard marks a departure from the previously industry-led approach to safeguarding against phishing scams. Unlike some other markets, such as the U.S.
and Europe, where withdrawal holds are more commonly determined by individual firms, South Korea's move introduces a centralized regulatory framework. The introduction of these measures is expected to provide an additional layer of protection against phishing scams, which often involve convincing victims to quickly convert cash into cryptocurrency and transfer it out of their accounts. By introducing a delay, even if brief, these scams can be disrupted, allowing victims time to reconsider or for alerts to be triggered before funds are transferred out of an account.