South Korean Cryptocurrency Exchanges to Review More Than 1300 Tokens

South Korean Crypto Exchanges Prepare to Evaluate More Than 1,300 Tokens


By Jimmy Aki
Last updated:
July 2, 2024, 12:51 EDT
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2 min read


In an effort to enhance investor safeguards, South Korean cryptocurrency exchanges, in partnership with the Digital Asset Exchange Alliance (DAXA), revealed a comprehensive set of guidelines on July 2 for the reassessment of listed cryptocurrencies.
This initiative, set to kick off on July 19, aligns with the introduction of South Korea’s inaugural regulatory framework specifically aimed at safeguarding crypto investors.
DAXA’s Novel Regulatory Framework for South Korean Crypto Exchanges
These self-regulatory criteria, formulated by 20 South Korean crypto exchanges, introduce a thorough evaluation process for both current and upcoming cryptocurrencies.
As per the July 2 announcement, 1,333 tokens presently traded in South Korea will undergo re-examination within a six-month grace period.
DAXA, however, holds the view that mass delistings are unlikely. This optimism stems from the fact that major exchanges have already been complying with similar standards.
In accordance with the new guidelines, fresh tokens will undergo scrutiny based on formal and qualitative prerequisites.
Some of these formal benchmarks encompass criteria concerning issuers’ credibility, measures for investor protection, security protocols, and regulatory compliance.
On the flip side, qualitative requisites include a comprehensive evaluation of diverse project-related aspects.
To ensure transparency and impartiality, South Korean cryptocurrency exchanges must establish independent decision-making bodies for token listings.
Moreover, all major decisions regarding listing and delisting must conform to the freshly set regulations. The decision-making process must be documented and retained for 15 years, with periodic reviews conducted every quarter.
This development carries considerable significance, particularly given South Korea’s influential position in the global cryptocurrency arena.
This influence is demonstrated in data from Kaiko, which highlights that the South Korean Won emerged as the top fiat currency used for crypto trading in the first quarter of 2024.
Conformity with Novel Crypto Laws
The impending crypto regulations, slated for enforcement prior to July 19, underscore South Korean authorities’ endeavors to shield investors from unscrupulous players in the crypto market and uphold market stability.
In line with this, the country’s financial overseer, the Financial Services Commission (FSC), sanctioned an enforcement decree outlining comprehensive measures for protecting users’ assets and combatting fraudulent activities in the digital asset sector.
A cornerstone of the new regulations mandates Virtual Asset Service Providers (VASPs) to segregate customer deposits from operational funds.
This fund isolation, coupled with the requirement to engage reputable financial institutions for safekeeping, aims to safeguard South Korean clients against potential losses in cases of exchange insolvencies.
The decree also introduces stringent security measures, obliging VASPs to store a minimum of 80% of users’ digital assets in cold storage – offline systems known for their resilience against cyber threats.
Likewise, regulators uphold the authority to raise this threshold based on their evaluation of a VASP’s security posture, thereby bolstering user asset protection.
The new regulations target market manipulation and fraud, outlining severe penalties for violators.
Individuals found guilty of exploiting the system could face imprisonment for a minimum of one year or fines amounting to five times their illegitimate gains.
Further reinforcing this stance, VASPs acquire the ability to restrict user deposits and withdrawals under specific circumstances, adding an additional layer of protection against illicit activities.
This commitment to investor protection is visibly illustrated by recent crackdowns, including the apprehension of 19 individuals implicated in a social media crypto scam that duped over 300 investors of nearly $19 million.
While South Korea has yet to impose taxes on crypto gains, authorities vigilantly monitor potential attempts to exploit crypto for tax evasion.
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