In a significant crackdown on phishing scams, South Korea's financial authorities have mandated that all domestic cryptocurrency exchanges implement a uniform, stringent system for delaying withdrawals. This move aims to counter the rising wave of voice phishing scams that exploit the speed of transactions.
The Financial Services Commission and the Financial Supervisory Service have introduced these new rules, which eliminate the discretionary powers exchanges previously had to allow users to bypass holding periods, as reported by local news outlets. Previously, each platform had its own set of rules for exceptions to maintain fast trading, which fraud groups would learn and use to coach their victims on how to bypass these rules.
Voice phishing scams typically involve convincing victims to quickly convert cash into cryptocurrency and transfer it within minutes. Even a brief delay can disrupt the scam by giving the victim time to reconsider or allowing alerts to be raised before the funds are transferred out of the account. Under the new system, exchanges are required to apply uniform criteria when reviewing exceptions to withdrawals, 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 movements. This shift marks a transition from industry-led security measures to a standardized national approach. In contrast, other markets like the U.S.
and Europe have common withdrawal holds, but these are set by individual companies. Some exchanges even allow users to set their own timelocks to prevent unauthorized withdrawals.
The South Korean regulators have not immediately responded to requests for further comment.