In a significant crackdown on phishing scams, South Korea's financial authorities have mandated that all domestic cryptocurrency exchanges implement a unified system for delaying withdrawals. This move aims to thwart the growing number 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 exchanges previously had to allow users to bypass holding periods, as reported by local news sources. Previously, platforms had their own rules for exceptions to maintain swift trading, which fraud groups would learn and use to coach victims into bypassing these safeguards. 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a brief delay can disrupt the scam by giving victims time to reflect or allowing alerts to be raised before funds are withdrawn from an account. Under the new regulations, exchanges must apply uniform criteria when evaluating withdrawal exceptions, including account history, transaction patterns, and sudden behavioral changes. Officials anticipate that less than 1% of users will be eligible for immediate withdrawals. Additionally, platforms are required to enhance identity verification and closely monitor fund flows.
This change represents a transition from industry-driven security measures to a nationwide standard. 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 allow users to set their own timelocks to prevent unauthorized withdrawals.
The South Korean regulators have not yet responded to requests for further comment.