In a significant crackdown on 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 move aims to counter the rapid surge in scams that exploit the speed of transactions.
The Financial Services Commission and Financial Supervisory Service have introduced these new rules, thereby eliminating the discretion exchanges previously had to allow users to bypass holding periods, as reported by local news sources. Historically, exchanges had set their own rules for exceptions to maintain swift trading, which fraud groups would then 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. Even a brief delay 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 when evaluating withdrawal exceptions, including factors such as account history, transaction patterns, and any 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 movements.
This development signifies a transition from industry-driven security measures to a standardized national approach. In contrast, other markets like the U.S. and Europe have withdrawal holds in place, but these are determined by individual companies, with some exchanges even allowing users to set their own withdrawal timelocks to prevent unauthorized transactions.
The South Korean regulators have not provided further comment on this matter at the time of request.