Regulation
South Korea Announces Major Cryptocurrency Delisting Regulations: Should Investors Be Worried?
- South Korea is preparing to implement strict cryptocurrency regulations, which include requirements for listing and delisting virtual assets for investor protection.
- The rules aim to introduce self-regulation into cryptocurrency exchanges ahead of the law on the protection of users of virtual assets in July.
South Korean financial regulators are set to introduce protocols to halt trading of certain cryptocurrencies, marking a significant move toward regulatory oversight of the cryptocurrency market. The upcoming “Best Practices for Compliance with the Virtual Asset User Protection Act” should describe virtual assets SEO criteria and provide guidance on the decision-making process for further trading of already listed virtual assets.
An insider within the South Korean Financial Supervisory Service revealed that the upcoming guidelines will cover standards for listing virtual assets. This sets the standards for the quantity of virtual asset issuance, quantity of distribution, and transaction support. Additionally, measures such as banning the tying of virtual assets to a hack record will also be examined. The rule will also require the submission of white papers and technical manuals in Korean on foreign virtual assets, increasing transparency and accountability in the crypto market.
Focus on self-regulation and compliance
Ahead of the Virtual Asset User Protection Act being signed into law in July, South Korea’s financial watchdog is drafting guidelines to encourage self-regulation of crypto exchanges. These guidelines aim to complement regulatory efforts by promoting responsible conduct within the industry.
Efforts to establish self-regulatory measures, including best practices and guidelines, reflect a proactive approach to closing regulatory gaps and strengthening market integrity. However, the authorities are committed to filling regulatory gaps and strengthen supervisory mechanisms to ensure investor protection and market integrity.
However, these attempts have failed to regulate issuers and distributors of virtual assets. An official from the Financial Supervisory Service has admitted the inherent shortcomings of the current regulatory environment. Criticism has been leveled at current self-regulatory initiatives, including the Digital Asset Exchange Alliance’s (DAXA) Common Listing Guidelines, as they are seen as ineffective in ensuring compliance between exchanges. The decision to introduce new best practices reflects a response to these criticisms and a commitment to strengthening regulatory oversight.
South Korea changes donation law
This news comes as South Korea’s Ministry of Public Administration recently amended the donation law, signaling a significant shift in the country’s stance on cryptocurrency. The revision, announced on May 5 by Kyunghyang Shinmun, eliminates cryptocurrency as a valid form of donation. The move aligns with South Korea’s ongoing efforts to establish a comprehensive regulatory framework for digital assets.
The amendment follows broader debates by the South Korean government regarding, among other issues, the regulation of cryptocurrencies and digital assets. According to the Basic Law on Digital Assets, discussions on issues such as the anonymity of virtual currency and money laundering are part of the competence. South Korea has been at the forefront of the push for transparency in the digital assets sector, requiring authorities to declare their cryptocurrency assets.
Bitcoin Kimchi Premium, which assesses the price gap between Bitcoin on exchanges in South Korea and around the world, has seen a continuous decline over the past four weeks. Based on data from CryptoQuant, the premium has decreased from 1.54% in the past, reflecting the change in price dynamics in the South Korean cryptocurrency market.
This drop in Kimchi Premium coincides with a notable decrease in trading volumes on South Korea’s five major cryptocurrency exchanges: Upbit, Bithumb, Coinone, Korbit and Gopax.