In a move that appears to be towards increased “investor protection," South Korea’s leading cryptocurrency exchanges are gearing up for a comprehensive review of 1,333 digital tokens.
This development comes as the nation prepares to implement a new user protection law set to take effect on July 19.
As Bloomberg reported, citing the Digital Asset Exchange Alliance, an industry trade group, these reviews are aimed at ensuring compliance with the upcoming regulations, countering concerns that the new rules could stifle the vibrant trade in altcoins.
Despite fears of widespread delistings, the alliance clarified that such actions would not happen immediately. Instead, the evaluation will unfold over six months, providing ample time for adjustments and compliance.
This approach underscores the industry's commitment to aligning with the government’s regulatory framework while safeguarding the interests of the crypto trading community.
Regulatory Tightening and Market Impact
The backdrop to these changes is a dynamic market environment where roughly 10% of South Koreans are engaged with crypto assets, predominantly in altcoins, rather than the leading Bitcoin market, as reported by Bloomberg.
This extensive engagement has even led to instances where the Korean Won surpassed the US Dollar as the most-used fiat currency in cryptocurrency transactions globally.
Source: Bloomberg
However, the announcement of the impending regulations can be attributed to the previously seen market unease, leading to a notable dip in crypto prices as traders speculated on the potential impact of restricted token availability on the exchanges.
Notably, these changes to reevaluate over 1k crypto tokens can be seen as a follow-up to the country's financial regulator, the Financial Service Commission (FSC), recently mandating that the 29 registered crypto exchanges—including major platforms like Upbit and Bithumb—undertake regular assessments of the tokens they list.
This move is part of a broader effort to clean up the crypto trading space, ensuring it is free from scams and financially unsafe projects.
The FSC is also in the process of drafting additional regulatory guidelines aimed at enhancing the transparency and security of crypto transactions, as disclosed in the local news report.
The introduction of the Virtual Asset User Protection law will impose “stringent penalties for violations,” including jail terms and hefty fines, thereby elevating the accountability standards within the crypto sector.
Additionally, every listed token must undergo a rigorous biannual review to maintain its listing status, with subsequent quarterly maintenance reviews to ensure ongoing compliance.
