South Korea's Financial Services Commission (FSC) announced a significant tightening of rules governing cryptocurrency exchange withdrawal-delay exemptions, aiming to close loopholes exploited in voice-phishing scams. The new framework, developed in collaboration with the Financial Supervisory Service (FSS) and the Digital Asset eXchange Alliance (DAXA), will impose unified standards for when users can bypass mandatory withdrawal delays.
The regulator revealed alarming data showing that from June to September 2025, accounts granted withdrawal-delay exemptions constituted 59% of all fraudulent accounts on crypto exchanges and were responsible for a staggering 75.5% of related financial losses. The FSC attributed this vulnerability to exchanges applying their own, inconsistent exception criteria with no clear minimum standard, allowing bad actors to quickly move funds after meeting easy requirements like account age or basic trading history.
Under the new rules, exchanges must now assess a broader set of factors including trading frequency, comprehensive account history, and deposit and withdrawal amounts when determining exemption eligibility. The FSC expects this to sharply reduce the number of users qualifying for exemptions, with a regulatory simulation suggesting the share of eligible users could fall to around 1%.
Furthermore, the FSC will strengthen oversight by requiring exchanges to conduct periodic checks on exempted accounts, verify the source of funds, and build systems to monitor suspicious withdrawal activity in real-time. The regulator stated it will continue to review and adjust the rules to prevent new circumvention methods.
This move is part of a broader regulatory crackdown in South Korea following recent incidents. Earlier in the week, the FSC ordered exchanges to reconcile internal ledgers with actual asset holdings every five minutes. This order came after an inspection linked to a Bitcoin (BTC) payout error at the exchange Bithumb uncovered gaps in internal controls and risk management systems. In January, South Korea also expanded crypto licensing scrutiny to cover exchanges and their major shareholders.
