Regulation
South Korea to reevaluate hundreds of crypto listings under new law
South Korea is set to review the listing of more than 600 cryptocurrencies on domestic exchanges starting next month.
This action comes as the country implements the new Virtual Asset User Protection Law, which imposes stricter regulatory measures. korean media Dnews Reports that financial authorities are in the final stages of finalizing practices for these exams, which will begin on July 19.
Under the new law, nearly three dozen have registered crypto exchanges in South Korea, including Upbit, Bithumb, Coinone, Korbit and Gopax, will be required to create review boards. These committees will evaluate various aspects of each token, such as the trustworthiness of the issuing entity, user protection measures, technology and security standards, and regulatory compliance. The aim is to ensure that all listed tokens meet the strict standards set by the authorities.
In addition to the basic criteria, exchanges must consider the issuer’s reputation, trading history, transparency of information disclosure, total supply and circulation, market capitalization, and any potential conflicts of interest. Tokens issued by decentralized autonomous organizations (DAO) may struggle to meet these standards.
However, tokens that have been trading smoothly for over two years on regulated markets like the US, UK, France, Germany, Japan, Hong Kong, Singapore, India and Australia will be subject to a less rigorous review process.
Quarterly reviews and risks of delisting
The new regulations stipulate that crypto exchanges will conduct an initial review of each token to decide whether to keep it or remove it from the list. Thereafter, these reviews will take place quarterly. Tokens deemed problematic will be designated as strikes and potentially delisted.
An official of the financial authority note,
“It is inevitable that transaction support will be suspended for virtual assets that do not meet the standards for maintaining transaction support.”
Exchanges will have six months to assess whether they should continue to support existing exchanges. cryptocurrency lists. Maintenance reviews will follow this period every three months, ensuring continued compliance with new regulatory standards.
Best Practices Plan for Supporting Virtual Asset Transactions
Local media recently reported that South Korean government has finalized a best practice plan for supporting virtual asset transactions. This plan sets strict new requirements for listing cryptocurrencies on national exchanges, improving the current system in which exchanges conduct internal reviews. The central goal of the new regulations is listing control, aiming to establish uniform standards to which all listed cryptocurrencies must comply.
An official from the financial authority explained that the review process would include checking whether the cryptocurrency format is suitable for listing, assessing the reliability of the issuer, ensuring user protection mechanisms , assessment of technological security levels and confirmation of compliance with national laws and regulations. The reliability of issuers will be examined based on their information disclosure practices and the circulation of cryptocurrency.
Technical security and qualitative criteria
Regarding technical security, cryptocurrencies must have no history of hacking incidents and disclose the source codes of their smart contracts. Additionally, cryptocurrencies issued directly by exchanges, those that conceal transaction history, and others violating current laws will not be eligible for listing. Authorities are also considering qualitative screening requirements, including subjective and descriptive questions and multiple-choice queries.
Merely complying with formal requirements will not guarantee the listing status of a cryptocurrency. Issuers must demonstrate complete information, a reasonable issuance and circulation plan and a credible business history. Even if all formal requirements are met, South Korean authorities can still challenge the listing of a cryptocurrency based on qualitative criteria. Exceptions will be made for assets traded without issuance for more than two years on well-regulated foreign exchanges.