South Korea Introduces Stricter Regulations for Crypto Exchanges: Delisting of Risky Altcoins

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As a seasoned crypto investor with a few years of experience under my belt, I welcome South Korea’s new Virtual Asset User Protection Act with open arms. The regulatory measures announced are long overdue and necessary to maintain investor safety and market integrity.

As a researcher examining the implications of the Virtual Asset User Protection Act in South Korea, I must investigate whether it is necessary for the financial authorities to continue permitting trading for approximately 600 alternative cryptocurrencies (altcoins) that are currently listed on crypto exchanges.

South Korea’s government is set to unveil a regulatory framework for businesses dealing in virtual assets following the passage of the Virtual Asset User Protection Act on July 19. A total of 29 virtual asset trading platforms, including Upbit, Bithumb, Coinone, Korbit, and Gopax, will receive this guideline to help them comply with the new regulations.

As a crypto investor, I would explain it this way: The exchanges where I trade my cryptocurrencies will need to assess each coin individually to decide if they’ll keep listing and facilitating trades for them.

Quarterly Reviews and Delisting: Ensuring Investor Safety and Market Integrity

Following this, the South Korean financial regulatory body mandates crypto exchanges to evaluate their digital currency offerings every three months. In case of identifying questionable cryptocurrencies during these assessments, exchanges must issue warnings and ultimately remove these tokens from their platforms.

An unidentified source revealed that exchanges have been granted a six-month window to assess the coins they currently trade and decide if they should continue providing trading support. After the initial review period, follow-up evaluations will occur every three months.

As a regulatory analyst, I would interpret the new rule as follows: Under this legislation, it falls upon me and my exchange to meticulously evaluate each cryptocurrency asset we list on our platform. Factors of consideration include but are not limited to: the reliability and trustworthiness of the asset’s underlying technology, the security measures in place to protect investors, and adherence to applicable laws and regulations. In essence, my role is to ensure that our exchange only deals with assets that meet the highest standards of safety, transparency, and regulatory compliance.

  • Capability and social credit of entities
  • Disclosure of key information
  • Ability of asset holders to participate in decision-making
  • Transparency of virtual asset operations
  • Total issuance and distribution volume, as well as market capitalization
  • Conflict of Interest
  • Security of distributed ledgers and virtual assets
  • Concentration risks in distributed ledgers

A new approach for identifying the originator in ambiguous situations, like with Bitcoin or tokens from decentralized autonomous organizations (DAO’s), will be presented instead.

As a crypto investor, I understand that certain digital assets undergo a more rigorous screening process, particularly those traded on exchanges based in countries with strict regulations like the United States, France, and Japan. In such cases, these assets might be exempted from specific compliance requirements.

Under the new legislation, it is forbidden for exchanges to accept any valuable assets as payment in return for rendering trading assistance.

The Virtual Asset User Protection Act recently introduced in South Korea signifies a significant shift in regulation, enhancing government oversight over cryptocurrency exchanges. This development aims to bolster investor and trader confidence by promoting a level playing field and safeguarding the market against fraudulent crypto coins.

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2024-06-17 12:46