South Korea’s Financial Services Commission has announced plans to strengthen the rules governing exemptions under crypto exchanges’ withdrawal-delay systems, following findings that accounts granted such exemptions were responsible for the majority of voice-phishing-related financial losses. The regulator made the announcement on Wednesday, stating the updated framework was developed in coordination with the Financial Supervisory Service and the Digital Asset eXchange Alliance. The new measures will establish unified standards for when users may bypass mandatory withdrawal delays.
Data cited by the FSC revealed that between June and September 2025, accounts holding withdrawal-delay exemptions represented 59% of all fraudulent accounts identified at crypto exchanges and accounted for 75.5% of associated losses. The regulator noted that exchanges had previously been applying their own individual exemption criteria without any clear minimum standard. This inconsistency created loopholes that allowed bad actors to move funds quickly by meeting relatively simple requirements, such as account age or trading history thresholds.
Under the revised rules, exchanges will be required to evaluate a broader set of factors when determining whether a user qualifies for an exemption. These include trading frequency, account history, and the amounts involved in deposits and withdrawals. The FSC said the stricter criteria are expected to significantly reduce the number of users eligible for exemptions. A simulation conducted by the regulator indicated that the share of qualifying users could fall to approximately 1% under the new framework, though no baseline figure was provided for comparison.
The FSC also said it will enhance ongoing oversight of users who are granted exemptions. This will include periodic checks such as verification of the source of funds, as well as the development of systems designed to monitor suspicious withdrawal activity. The regulator added that it intends to keep reviewing the rules to prevent new methods of circumvention and to make adjustments as circumstances require.
The announcement is part of a broader regulatory push in South Korea to tighten controls over crypto exchanges following a series of recent incidents. On Tuesday, the FSC ordered exchanges to reconcile their internal ledgers with actual asset holdings every five minutes. That directive came after an inspection connected to a payout error at Bithumb uncovered gaps in internal controls and risk management systems. The Bithumb incident involved an erroneous Bitcoin payout and prompted fresh reforms to be announced this week.
South Korea’s regulatory tightening has extended beyond operational controls. On January 29, the country expanded its crypto licensing scrutiny to include exchanges and their major shareholders. Taken together, the recent measures reflect a sustained effort by South Korean authorities to address both fraud vulnerabilities and systemic operational risks within the domestic crypto industry. The FSC indicated it will continue to monitor developments and refine its approach as needed.
Originally reported by CoinTelegraph.
