South Korea expands telecom fraud refunds to crypto assets, tightens exchange duties

South Korea’s Financial Services Commission says an amendment to the telecom fraud victim refund law has cleared the National Assembly. The move broadens the scope of who is protected and how refunds are provided when scam losses occur.

Under the revision, virtual asset exchanges must meet the same anti-fraud and victim-relief duties as licensed financial institutions. Exchanges are required to verify the purpose of cryptocurrency trades, continuously monitor for funds moving in ways consistent with voice phishing, and, if wrongdoing is suspected, immediately suspend the relevant accounts and support refunds to victims.

A key change is the expansion of the compensation scope to include virtual assets. Previously, refunds were limited to monetary losses, creating gaps for victims whose assets were stolen or converted into cryptocurrency. The update makes crypto assets eligible for refund in appropriate cases, broadening remedies for crypto-related telecom scams.

The law also provides a framework for exchanges to sell crypto assets directly to cash out refunds for victims who request it. This creates a direct channel for converting recovered crypto into cash and delivering restitution more efficiently.

Officials say integrating crypto exchanges into the government’s victim-protection framework will strengthen the overall response to voice phishing and help build a more comprehensive protective network. The measure signals a tightening of regulatory oversight over crypto platforms in Korea.

The amendment takes effect six months after promulgation, with implementation slated for October. For international readers, the development underscores growing regulatory expectations that cryptocurrency traders and platforms shoulder responsibility for fraud prevention and restitution, a trend likely to influence cross-border discussions on crypto oversight, consumer protection, and financial security.

Context for non-Korean readers: the Financial Services Commission is Korea’s main financial regulator, overseeing banks, securities, and other financial firms. Telecom fraud, particularly voice phishing, remains a high-priority crime in Korea, with regulators increasingly tying crypto activity to consumer protection and fraud controls.