South Korea Tightens Crypto Withdrawal Delay Exemptions | Crypto Regulation News
Crypto regulation news: South Korea Tightens Crypto Withdrawal Delay Exemptions. This update explains what changed, why it matters for the crypto market, and what investors, exchanges, and blockchain companies should watch next.
Crypto Regulation Update
South Korea’s financial regulator said it will tighten the exception rules under crypto exchanges’ withdrawal-delay system after finding that scam-linked accounts granted exemptions accounted for most voice-phishing-related losses. The Financial Services Commission (FSC) said Wednesday that the strengthened framework, developed with the Financial Supervisory Service (FSS) and the Digital Asset eXchange Alliance (DAXA), will impose unified standards on when users can bypass withdrawal delays. The regulator said exchanges had been applying their own exception criteria with no clear minimum standard, creating loopholes that let bad actors quickly move funds if they meet easy requirements such as account age or trading history. From June to September 2025, accounts granted withdrawal-delay exemptions made up 59% of fraudulent accounts and 75.5% of related losses at crypto exchanges, the FSC said.The move follows a wider South Korean push to tighten crypto exchange controls after voice-phishing abuse and operational-control failures, including fresh reforms announced this week after Bithumb’s Bitcoin (BTC) payout error.Transfer route and protection device for voice phishing damage through virtual assets, translated to English. Source: FSCUnified rules aim to curb misuse of withdrawal-delay exemptionsThe FSC said that under the new rules, exchanges must assess factors like trading frequency, account history and deposit and withdrawal amounts when determining whether a user qualifies for a withdrawal-delay exemption. The regulator said the change is expected to reduce the number of users eligible for exemptions sharply. The FSC said a simulation showed the share of users eligible for exemptions would fall to around 1% under the new rules, but did not provide a baseline for comparison.Related: South Korean brokerage Korea Investment & Securities eyes Coinone stake: ReportThe FSC said it will also strengthen oversight of users granted exemptions through periodic checks, including verification of the source of funds, and by building systems to monitor suspicious withdrawal activity. The regulator added that they will continue reviewing the rules to prevent new circumvention methods and adjust as needed. The move adds to a broader push by South Korean regulators to tighten oversight of crypto exchanges following recent incidents. On Tuesday, the FSC ordered exchanges to reconcile internal ledgers with actual asset holdings every five minutes after an inspection linked to the Bithumb payout error found gaps in internal controls and risk management systems.On Jan. 29, South Korea expanded crypto licensing scrutiny to cover exchanges and major shareholders. Magazine: ‘Phantom Bitcoin’ checks, Drift hack linked to North Korea: Asia ExpressCointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently. Read our Editorial Policy https://cointelegraph.com/editorial-policy
Why This Crypto Regulation News Matters
First, this development may affect exchanges, token listings, stablecoins, compliance rules, and market sentiment. In addition, it may influence licensing, reporting requirements, and future enforcement actions. As a result, traders and investors should watch the next legal and policy steps closely.
What to Watch Next
Watch for follow-up statements from regulators, court filings, exchange responses, and policy updates. In particular, any new guidance on licensing, enforcement, or stablecoin rules could have a direct impact on the broader crypto market.
