South Korean financial authorities may delist about 600 altcoins this year under the new Virtual Asset User Protection Act, starting next month.
This move comes in response to the forthcoming Virtual Asset User Protection Act, which takes effect on July 19 and aims to enhance regulatory compliance within the crypto sphere.
Recent reports from local media indicate that the South Korean government has finalized a stringent framework called the best practice plan for supporting virtual asset transactions.
This plan outlines rigorous criteria that cryptocurrencies must meet to remain listed on domestic exchanges. Unlike the current system where exchanges conduct their own reviews, the new approach involves authorities setting standards for all listed tokens.
The focal point of these regulations lies in listing screenings. Exchanges will now reassess their support for each virtual asset every six months, followed by subsequent reviews every three months. Assets failing to meet the prescribed standards risk suspension of transaction support.
The new criteria encompass nine key aspects, including suitability for listing, issuer reliability, user protection mechanisms, technology security, and adherence to local laws.
Reliability checks will involve examining information disclosure practices and circulation, while user protection assessments will focus on blockchain activity tracking and white paper accessibility.
Technical security is also paramount, with cryptocurrencies required to have a clean hacking record and transparent smart contract source codes. Tokens with obscured transaction histories or issued directly by exchanges, among others, will face delisting.
Issuers must show comprehensive disclosure, sound issuance plans, and credible business histories, with South Korean authorities reserving the right to challenge listings based on qualitative criteria, except for assets with a clean track record on well-regulated overseas exchanges.
The regulatory changes in South Korea could significantly impact the local crypto scene, particularly affecting altcoins with low trading volumes and problematic disclosures, given the country’s 29 domestic crypto exchanges like Upbit.