South Korean Cryptocurrency Exchanges May Delist Numerous Altcoins
South Korean cryptocurrency exchanges are considering delisting “hundreds of altcoins” this year, as financial authorities prepare to increase 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 evaluating whether to discontinue transaction support for approximately 600 coins on virtual asset exchanges.
Reports on June 16 indicated that regulators are working on finalizing a plan for supporting cryptocurrency transactions. The act is set to come into force on July 19, and is expected to bring significant changes to the sector. Fiat KRW-trading platforms like Upbit, Bithumb, Coinone, Korbit, and Gopax will have to comply with the regulations.
In addition to these platforms, the rules will also apply to more than 20 other exchanges that do not yet have KRW trading permits and can only offer crypto-to-crypto pairs. South Korean regulators are reportedly planning to require 29 platforms to conduct an initial review to determine whether to maintain or delist the 600 altcoins collectively listed on their platforms.
Exchanges will be obligated to conduct quarterly reviews of the coins they offer and must provide cautionary notices for potentially risky tokens before delisting them. An unnamed regulatory official stated that all exchanges must establish a listing and delisting unit to evaluate the security, reliability, and compliance of the coins on their platforms.
The assessment will cover various factors including social credit, development, issuance, transparency, market cap, and other risks. Decentralized projects like Bitcoin and DAO-related projects will have alternative screening requirements, while well-known tokens such as Ethereum and XRP may be exempt from certain protocols.
Coins that have been traded in overseas markets with strict regulatory systems for over two years are likely to be approved. Countries like the United States, the United Kingdom, France, Germany, Japan, Hong Kong, Singapore, India, and Australia were cited as examples of such markets.
The new regulations will also impose severe penalties on exchanges that accept assets in exchange for enabling transaction support. Previous scandals involving “kimchi coins” have raised concerns about the integrity of South Korean exchanges. These changes have been anticipated for years, with major exchanges already removing low-cap coins in preparation for regulatory scrutiny.