TLDR
- South Korea will review over 600 cryptocurrency listings on domestic exchanges starting in July 2024 under the new Virtual Asset User Protection Act.
- Exchanges must establish review committees to evaluate factors like the reliability of issuers, user protection, technology standards, regulatory compliance, and potential conflicts of interest.
- Tokens issued by decentralized autonomous organizations (DAOs) may face stricter scrutiny, while major cryptocurrencies traded on regulated global exchanges will likely receive less strict reviews.
- Exchanges will be banned from accepting payments in return for listing tokens, addressing past “cash-for-listings” scandals.
- Tokens deemed problematic will be designated as cautionary and potentially delisted, with exchanges conducting quarterly reviews after an initial six-month assessment period.
South Korea’s cryptocurrency market is bracing for a major shakeup as new regulations take effect next month.
The Virtual Asset User Protection Act, which comes into force on July 19th, will require the country’s nearly 30 registered crypto exchanges to conduct stringent reviews of over 600 digital asset listings.
The overarching goal is to weed out cryptocurrencies that fail to meet robust criteria related to issuer credibility, user protections, technical security standards, and regulatory compliance.
Exchanges like Upbit, Bithumb, Coinone, Korbit and Gopax must establish special committees to evaluate each listed token.
A key focus will be assessing the reliability and transparency of the entities behind the cryptocurrencies. Committees will scrutinize issuers’ business histories, disclosure practices, operational transparency and any conflicts of interest.
The technical underpinnings, including security audits, smart contracts and past hacking incidents, must also pass muster.
User safeguards are another paramount consideration. Exchanges must ensure listed cryptocurrencies provide mechanisms for tracking blockchain activity, accessing whitepapers and clear information for investors. In total, the new rules outline nine core criteria cryptocurrencies must satisfy.
Tokens issued by decentralized autonomous organizations (DAOs) may face higher hurdles as they could struggle to meet standard requirements.
However, major cryptos like Ethereum and XRP that trade on well-regulated global exchanges will likely undergo a smoother review process.
Exchanges will be banned from accepting payments to list tokens, addressing previous “cash-for-listing” scandals allegedly aimed at pumping token prices.
They face an initial six-month period to assess current offerings, followed by recurring quarterly maintenance reviews.
Cryptocurrencies designated as problematic risk receiving cautionary labels and potential delisting from Korean trading platforms.
With hundreds of altcoins potentially on the chopping block, the new law represents a sweeping attempt to instill greater transparency and protection in South Korea’s crypto sector.
Major cryptocurrencies like Ethereum (ETH) and XRP, which have been traded for over two years on well-regulated global exchanges such as those in the United States, United Kingdom, France, Germany, Japan, Hong Kong, Singapore, India, and Australia, are expected to undergo a less strict review process.
Exchanges will be strictly prohibited from accepting any payments in return for listing tokens, addressing past controversies involving alleged “cash-for-listings” schemes aimed at artificially inflating token prices.
The initial review period will last six months, after which exchanges will be required to conduct maintenance reviews every three months.
Tokens deemed “problematic” during these assessments will be designated as cautionary and potentially delisted from the platforms.
