South Korea’s Financial Supervisory Service (FSS) has initiated a major system overhaul designed to include losses from cryptocurrency-related fraud in its victim reimbursement program, according to reports from SBS Biz and other local outlets. The move follows a March 31 revision of the Telecommunications Fraud Damage Refund Act, which broadened the definition of refundable property to cover virtual assets.
Currently, the FSS’s calculation engine only processes losses denominated in South Korean won. Starting in October, the upgraded system will apply refund ratios that consider the type and quantity of tokens stolen, as well as the won-converted value at the time a payment suspension is imposed. This will enable the agency to compensate victims whose funds were converted into digital assets or taken as crypto outright.
The revision mandates that crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and GOPAX, now adhere to the same anti-voice-phishing obligations as banks. They must verify transaction purposes, monitor for suspected phishing funds, freeze flagged accounts, and assist in returning victim assets. The system will also tackle complex cases where stolen money is split across several accounts and later consolidated.
The FSS expects the development and testing period to last from September through late November, with a budget of 118.53 million won (about $85,000). Victims will receive electronic notices detailing the token name, units, and the frozen-time won value. The reform comes amid a sharp rise in telecom-based fraud losses, which climbed 14.1% in 2025 to 433.8 billion won — the highest in five years — and an increase in schemes where scammers convert stolen money into cryptocurrency to move it abroad.
By extending protections to digital assets, South Korea’s FSS is setting a regulatory benchmark that may influence other jurisdictions facing similar fraud trends.
