Regulation
600 cryptocurrencies face South Korean regulatory review
South Korean financial authorities plan to reassess the listing of around 600 cryptocurrencies traded on domestic exchanges.
This strict review aims to ensure compliance with new regulations under the Virtual Asset User Protection Act, which took effect on July 19.
Delisting Concerns Rise as South Korea Tightens Crypto Regulations
Local media recently reported that South Korean government finalizes best practices plan for supporting virtual asset transactions. This plan defines strict new requirements for the listing of cryptocurrencies on national exchanges. The current system, in which exchanges carry out their own internal reviews, will be supplemented by a stricter review process established by the authorities.
Learn more: Crypto regulation: what are the advantages and disadvantages?
The new regulations the central objective is the selection of lists. Under the current system, exchanges review and list cryptocurrencies individually. However, by implementing the best practice plan, authorities will establish standards that all listed cryptocurrencies must comply with.
A financial authority official explained that exchanges will review every six months whether to maintain transaction support for each virtual asset. Subsequent reviews would then take place every three months.
“It is inevitable that transaction support will be suspended for virtual asset items that do not meet the standards for maintaining transaction support,” the official said. added.
Nine key control requirements are under discussion. These include checking whether the cryptocurrency format is suitable for listing, assessing the reliability of the issuer, ensuring the presence of user protection mechanisms, evaluating the technology. security levels and confirm compliance with national laws and regulations.
South Korean authorities will assess the trustworthiness of issuers by reviewing their information disclosure practices and verifying the circulation of cryptocurrency. For user protection, authorities will check whether an on-chain explorer can track blockchain whitepapers and activity.
New security standards and qualitative criteria for cryptocurrency lists
Regarding technical security, cryptocurrencies must have no history of hacking incidents and disclose the source codes of their smart contracts. Additionally, coins and tokens issued directly by exchanges, coins and tokens that conceal transaction history, and others cryptocurrencies violating current laws will not be eligible for registration.
The authorities are also considering quality control requirements. These include subjective and descriptive questions in addition to multiple choice queries.
Mere compliance with formal requirements will not guarantee the listing status of assets. Issuers must also demonstrate complete disclosure, a reasonable issuance and circulation plan, and a credible business history.
Even if a cryptocurrency meets all formal requirements, South Korean authorities can still challenge its listing based on qualitative criteria. There are exceptions, however, for assets that have been traded without issue for more than two years on well-regulated foreign exchanges.
South Korea is home to 29 domestic crypto exchanges, including Upflow. According to CoinGecko dataUpbit has the 13th highest transaction volume in the world.
Learn more: 10 Best Altcoin Exchanges in 2024
This regulatory overhaul could have a significant impact The crypto market in South Korea. Given that altcoins account for over 60% of the market’s trading volume, the new measures could lead to a substantial contraction of the local crypto market. Coins with low trading volumes and problematic listing disclosures should be the first to be delisted.
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