South Korean Crypto Exchanges Set to Delist Numerous Altcoins
South Korean cryptocurrency exchanges are preparing to delist “hundreds of altcoins” this year as financial authorities ramp up their oversight of the industry.
According to the publication Daehan Kyungjae, the upcoming Virtual Asset User Protection Act will take effect in July. This means that regulators will begin assessing whether to stop supporting transactions for approximately 600 coins on virtual asset exchanges starting next month.
Reported on June 16, regulators are working on finalizing a plan for supporting cryptoasset transactions. The act will come into force on July 19 and is expected to bring significant changes to the industry. Major fiat KRW-trading platforms like Upbit, Bithumb, Coinone, Korbit, and Gopax will need to comply with the new regulations.
Additionally, the same rules will apply to more than 20 other exchanges that do not currently have KRW trading permits and can only offer crypto-to-crypto pairs.
South Korean regulators are planning to require 29 platforms to carry out an initial review to decide whether to delist or continue supporting the 600 altcoins they collectively list. Exchanges will also be mandated to conduct quarterly reviews of the coins on their platforms, flagging risky tokens with cautionary notices before potentially removing them.
An unidentified regulatory official stated that under the new law, all exchanges must establish a listing and delisting unit to evaluate the security, reliability, and compliance of the coins listed on their platforms. These teams will assess various factors, including social credit, development, issuance, information disclosure, transparency, market cap, conflict of interest, and other risks.
For decentralized projects like Bitcoin and DAO-related projects, alternative screening requirements will be provided. However, well-known tokens such as Ethereum (ETH) and XRP may be exempt from some protocols.
The media outlet reported that coins traded for more than two years in countries with strict regulatory systems like the United States, the United Kingdom, France, Germany, Japan, Hong Kong, Singapore, India, and Australia are likely to be approved.
The new regulations will also impose severe penalties on exchanges that accept assets in exchange for enabling transaction support. Past scandals involving low-cap “kimchi coins” securing listings under dubious circumstances have raised concerns about the integrity of South Korean exchanges.
These changes have been in the works for years, with major domestic exchanges purging numerous low-cap “kimchi coins” from their platforms in 2021 in anticipation of regulatory action.
