In a significant crackdown on phishing scams, South Korea's financial regulatory bodies have mandated that all local cryptocurrency exchanges implement a unified, stringent system for delaying withdrawals. This move aims to counter the rapid rise of voice phishing 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 allow users to bypass holding periods, as reported by local news sources. Previously, each platform set its own rules for exceptions to maintain fast trading, which fraudsters learned and used 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 such scams by giving victims time to reflect or allowing alerts to be raised before the 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 abrupt changes in behavior. Officials anticipate that less than 1% of users will be eligible for immediate withdrawals. Furthermore, platforms must enhance identity verification processes and closely monitor fund movements.
This development signifies a transition from industry-driven safeguards 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. Some exchanges even permit users to set their own timelocks to prevent unauthorized withdrawals.
The South Korean regulators have not provided further comment on this matter at the time of inquiry.