In a significant move to combat 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 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, effectively eliminating the discretion exchanges previously had to bypass holding periods for users, as reported by local news outlets.
Historically, crypto platforms had set their own rules for exceptions to maintain rapid trading, which fraud groups had learned to circumvent by coaching their victims on how to exploit these exceptions. Voice phishing scams typically involve convincing victims to quickly convert cash into cryptocurrency and transfer it within minutes. Introducing even a brief delay can disrupt such scams by giving victims time to reconsider or allowing alerts to be triggered 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 be eligible for immediate withdrawals. Additionally, platforms are obligated to enhance identity verification processes and closely monitor fund flows. This move signifies a transition from industry-driven safeguards to a standardized national approach.
Unlike some other markets, such as the U.S. and Europe, where withdrawal holds are common but determined by individual companies, South Korea's regulatory bodies have taken a centralized approach.
Some exchanges in other markets even allow users to set personal timelocks to prevent unauthorized withdrawals. The South Korean regulators have not provided further comment on the matter at this time.