Regulation
South Korea will reevaluate hundreds of cryptocurrency listings under new law
South Korea is set to review the listings of more than 600 cryptocurrencies on domestic exchanges starting next month.
This action comes as the country implements the new Virtual Asset User Protection Act, which imposes more stringent regulatory measures. Korean newspaper News reports that financial authorities are in the final stages of finalizing the paperwork for these reviews, which will begin on July 19.
Under the new law, nearly three dozen cryptocurrency exchanges registered in South Korea, including Upbit, Bithumb, Coinone, Korbit and Gopax, will be required to set up review committees. 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 goal is to ensure that all listed tokens meet the rigorous standards set by the authorities.
In addition to the basic criteria, exchanges must consider the issuer’s reputation, corporate history, transparency in information disclosure, total supply and circulation, market capitalization and any potential conflicts of interest. Tokens issued by decentralized autonomous organizations (DAOs) may face difficulties in meeting these standards.
However, tokens that have been traded without problems for over two years in regulated markets such as the United States, United Kingdom, France, Germany, Japan, Hong Kong, Singapore, India and Australia will be subjected to a less rigorous review process.
Quarterly reviews and delisting risks
The new regulations state that cryptocurrency exchanges will conduct an initial review of each token to decide whether to keep or remove it from the list. Subsequently, these reviews will take place on a quarterly basis. Tokens deemed problematic will be designated as precautionary and potentially removed from the list.
An official of the financial authority noticed,
“It is inevitable that transaction support will be suspended for virtual asset items that do not meet the standards for maintaining transaction support.”
Exchanges will have six months to evaluate whether to continue supporting existing crypto listings. Maintenance reviews will follow this period every three months, ensuring continued compliance with new regulatory standards.
Best practice plan for supporting virtual asset transactions
Local media recently reported that the South Korean government has finalized a best practice plan to support virtual asset transactions. This plan outlines strict new requirements for listing cryptocurrencies on national exchanges, improving the current system in which exchanges conduct internal reviews. The central focus of the new regulations is listing screening, with the aim of establishing uniform standards that all listed cryptocurrencies must meet.
An official from the financial authority explained that the review process will include checking whether the format of the cryptocurrency is suitable for listing, assessing the reliability of the issuer, ensuring user protection mechanisms, evaluating security levels technology and confirmation of compliance with national laws and regulations. The reliability of issuers will be examined based on their information disclosure practices and cryptocurrency circulation.
Technical safety and quality 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 hide transaction history, and others that violate current laws will not be eligible for listing. Authorities are also considering qualitative screening requirements, including subjective and descriptive questions and multiple-choice questions.
Merely meeting the formal requirements will not guarantee the listing status of a cryptocurrency. Issuers must demonstrate complete disclosure, a reasonable issuance and circulation plan, and a credible business history. Despite meeting all formal requirements, South Korean authorities may still challenge the listing of a cryptocurrency based on qualitative criteria. Exceptions will be made for assets traded emission-free for more than two years on well-regulated foreign exchanges.