South Korea to Reassess Hundreds of Crypto Listings Under New Law
South Korea is set to review the listings of over 600 cryptocurrencies on domestic exchanges starting next month.
This action comes as the country implements the new Virtual Asset User Protection Act, which mandates stricter regulatory measures. Korean news outlet Dnews reports that financial authorities are in the final stages of finalizing practices for these reviews, which will commence on July 19.
Under the new law, nearly three dozen registered crypto exchanges in South Korea, including Upbit, Bithumb, Coinone, Korbit, and Gopax, will be required to establish review committees. These committees will evaluate various aspects of each token, such as the reliability 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 stringent standards set by the authorities.
In addition to the basic criteria, exchanges must consider the issuer’s reputation, business 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 challenges meeting these standards.
However, tokens that have been traded without issues for over two years in regulated markets like the U.S., U.K., France, Germany, Japan, Hong Kong, Singapore, India, and Australia will undergo a less rigorous review process.
Quarterly Reviews and Delisting Risks
The new regulations stipulate that crypto exchanges will conduct an initial review of each token to decide whether to maintain or delist it. Subsequently, these reviews will take place quarterly. Tokens that are deemed problematic will be designated as cautionary and potentially delisted.
An official from the financial authority noted,
“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 assess whether to continue supporting existing crypto listings. Maintenance reviews will follow this period every three months, ensuring continuous compliance with the new regulatory standards.
Best Practice Plan for Virtual Asset Transaction Support
Local media recently reported that the South Korean government has finalized a best practice plan for virtual asset transaction support. This plan outlines strict new requirements for listing cryptocurrencies on domestic exchanges, enhancing the current system where exchanges conduct internal reviews. The central focus of the new regulations is listing screening, aiming to establish uniform standards that all listed cryptocurrencies must meet.
An official from the financial authority explained that the review process would include verifying whether the cryptocurrency format is suitable for listing, assessing issuer reliability, ensuring user protection mechanisms, evaluating technology security levels, and confirming compliance with domestic laws and regulations. Issuers’ reliability will be scrutinized based on their information disclosure practices and the cryptocurrency’s circulation.
Technical Security and Qualitative Criteria
Regarding technical security, cryptocurrencies must have no history of hacking incidents and disclose their smart contract source codes. Additionally, cryptocurrencies issued directly by exchanges, those that conceal transaction history, and others violating current laws will be ineligible for listing. Authorities are also considering qualitative screening requirements, including subjective and descriptive questions and multiple-choice queries.
Meeting the formal requirements alone will not guarantee a cryptocurrency’s listing status. Issuers must demonstrate comprehensive disclosure, a reasonable issuance and circulation plan, and a credible business history. Despite meeting all formal requirements, South Korean authorities may still challenge a cryptocurrency’s listing based on qualitative criteria. Exceptions for assets traded without issues for over two years on well-regulated overseas exchanges will be made.
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