In a significant crackdown on phishing scams, South Korea's financial regulatory bodies have mandated that all domestic cryptocurrency exchanges implement a uniform, stringent system for delaying withdrawals. This move aims to thwart the increasing incidence of voice phishing scams that rely on rapid transaction processing. The new rules, announced by the Financial Services Commission and Financial Supervisory Service, eliminate the discretion previously held by exchanges to bypass holding periods, as reported by local news outlets.
Historically, platforms 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 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 reconsider or allowing alerts to surface before funds are transferred out of an account. Under the new regulations, exchanges must 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 qualify for immediate withdrawals. Additionally, platforms are required to enhance identity verification and closely monitor fund flows. This shift from industry-led safeguards to a national standard is noteworthy, particularly when compared to other markets like the U.S. and Europe, where withdrawal holds are common but determined by individual firms.
Some exchanges even allow users to set their own timelocks to prevent unauthorized withdrawals. The South Korean regulators have not provided further comment on the matter at this time.