South Korea's Financial Supervisory Service (FSS) has begun rebuilding the software it uses to reimburse victims of voice phishing, with changes set to take effect in October that will enable the system to calculate and repay losses held as cryptocurrency rather than only in Korean won.

The FSS's current calculation engine assumes that stolen funds were held in Korean won, leaving it unable to fully compensate victims whose money had been converted into digital assets or taken as cryptocurrency outright. The upgraded system will apply a refund ratio that determines the specific token type and quantity owed to each victim, along with the won value at the moment a payment was frozen.

The redesigned system will also handle complex cases in which scam proceeds are divided across multiple accounts and subsequently pooled back together. It will pre-calculate claims in batches rather than computing each case individually on demand. Victims will receive electronic notices displaying the token name, the number of units, and the frozen-time won value.

Legislative Basis: Telecommunications Fraud Damage Refund Act

The overhaul stems from a March 31 revision of the Telecommunications Fraud Damage Refund Act, which brings virtual assets within the definitions of both damaged property and refundable property. Under the amendment, cryptocurrency exchanges including Upbit, Bithumb, Coinone, Korbit, and GOPAX — collectively South Korea's largest domestic trading platforms — will be subject to the same voice-phishing prevention and victim-relief obligations as banks. These platforms must verify the purpose of transactions, monitor for suspected phishing funds, freeze payments on flagged accounts, and assist in returning stolen assets to victims.

The extension of bank-style compliance duties to crypto exchanges builds on South Korea's broader digital asset regulatory framework, which includes the Virtual Asset User Protection Act that took effect in July 2023 and established investor-protection, reporting, and custody requirements for virtual asset service providers.

Implementation Timeline and Budget

The revised refund law is scheduled to take effect on October 1. The FSS will continue developing and refining its system from September through the end of November — a roughly three-month project budgeted at 118.53 million won. The regulator stated that the extended timeline allows for addressing any technical faults or additional fixes that may arise after the system goes live.

The legislative revision follows a series of cases in which stolen funds were deliberately routed through cryptocurrency to move them out of the country. The FSS recently warned of a scheme in which scammers take control of low-credit borrowers' bank accounts under the pretense of offering loans, use the deposited funds to purchase large volumes of gift certificates, cash those out, convert the proceeds into cryptocurrency, and remit them to ringleaders overseas.

Under the Electronic Financial Transactions Act, handing over a bankbook or debit card can carry a penalty of up to five years in prison or a fine of up to 30 million won, approximately $21,600.

Rising Telecom Fraud Losses

Telecommunications-based fraud losses in South Korea rose 14.1% to 433.8 billion won in 2025, the highest level in five years, according to FSS figures. The figures predate the October implementation of the revised refund system, which will be watched as a test case for whether automated, crypto-aware reimbursement infrastructure can meaningfully improve recovery rates for victims of cross-border fraud schemes.