In a decisive move against phishing scams, South Korean financial authorities have mandated that all domestic cryptocurrency exchanges implement a uniform system for delaying withdrawals. This initiative aims to curb the rise of voice phishing scams that exploit transaction speed.
Local news outlets report that both the Financial Services Commission and the Financial Supervisory Service have issued these regulations, eliminating the previous flexibility exchanges had in allowing users to bypass holding periods. Previously, platforms independently determined exceptions to maintain rapid trading, which fraudsters exploited by instructing victims on how to evade these controls.
Voice phishing scams typically pressure individuals into swiftly converting cash to cryptocurrency and transferring it. Introducing a delay can disrupt such fraudulent activities by providing victims time to reconsider or enabling alerts before the funds are moved.
The new regulation requires exchanges to uniformly apply criteria when assessing withdrawal exceptions, considering factors like account history, transaction patterns, and abrupt behavioral changes. Authorities anticipate that fewer than 1% of users will meet the criteria for instant withdrawals. Additionally, identity verification processes must be strengthened, and fund flows monitored more stringently.
This represents a transition from industry-specific safety measures to a standardized national policy.
While withdrawal holds are standard in other markets like the U.S. and Europe, they are typically set by individual companies. Some exchanges even allow users to establish their own timelocks to prevent unauthorized withdrawals.
As of now, South Korean regulators have not commented on CoinDesk’s inquiry for further details.