In a significant crackdown on 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 combat the rising incidence of voice phishing scams that exploit the speed of transactions. The Financial Services Commission and Financial Supervisory Service have introduced these new rules, eliminating the discretion previously held by exchanges to allow users to bypass holding periods, as reported by local news outlets. Previously, exchanges had set their own rules for exceptions to maintain rapid trading, which fraud groups had learned to manipulate by coaching victims on how to bypass these rules.
Voice phishing scams typically involve deceiving victims into converting cash to cryptocurrency and transferring it within minutes. Implementing 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 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 from industry-led safeguards to a national standard is a notable development.
In contrast, other markets like the U.S. and Europe have withdrawal holds in place, but these are set by individual companies. Some exchanges even permit users to set their own timelocks to prevent unauthorized withdrawals.
The South Korean regulators have not immediately responded to requests for further comment.