In a significant move to combat the rising tide of voice phishing scams, South Korea's financial watchdogs have mandated that all local cryptocurrency exchanges implement a uniform, stringent system for delaying withdrawals. This initiative aims to thwart scams that exploit swift transaction capabilities. Previously, exchanges had the discretion to set their own rules for bypassing holding periods, which fraudsters had learned to exploit by coaching victims on how to navigate these exceptions.
Voice phishing scams typically involve convincing victims to rapidly convert cash to cryptocurrency and transfer it within minutes. Introducing a delay, however brief, can disrupt these scams by giving victims time to reconsider or allowing alerts to emerge before funds are transferred. Under the new framework, exchanges are required to apply consistent criteria for evaluating withdrawal exceptions, including account history, transaction patterns, and abrupt behavioral changes.
It is anticipated that less than 1% of users will qualify for immediate withdrawals. Furthermore, exchanges must enhance identity verification processes and closely monitor fund movements. This shift from industry-driven safeguards to a nationally standardized approach marks a significant development.
Unlike some other markets, such as the U.S. and Europe, where withdrawal holds are common but determined by individual companies, South Korea is adopting a centralized standard.
The regulatory bodies did not immediately provide further comment on the matter.