In a significant crackdown on phishing scams, South Korea's financial authorities have mandated that all local cryptocurrency exchanges implement a uniform, stringent system for delaying withdrawals. This move aims to counter the recent surge in voice phishing scams that rely on rapid transactions.
The Financial Services Commission and the Financial Supervisory Service have introduced new rules that eliminate the discretion exchanges previously had to allow users to bypass holding periods, as reported by local news sources. Previously, exchanges had set their own rules for exceptions to maintain swift trading, which fraud groups exploited by coaching victims on how to bypass these rules. Voice phishing scams typically deceive victims into converting cash to cryptocurrency and transferring it within minutes.
Even a brief delay can disrupt the scam by giving victims time to reconsider or allowing alerts to emerge before funds are transferred from an account. Under the new system, exchanges are required to apply uniform criteria when evaluating withdrawal exceptions, including account history, transaction patterns, and abrupt changes in behavior.
Officials anticipate that less than 1% of users will be eligible for instant withdrawals. Additionally, platforms must enhance identity verification and closely monitor fund flows. This move represents a shift from industry-led security measures to a nationwide standard.
In contrast, other markets such as the U.S. and Europe have common withdrawal holds, 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 did not immediately respond to requests for further comment.