South Korea’s financial authorities plan to reassess the listing of approximately 600 cryptocurrencies traded on domestic exchanges.

This strict review aims to ensure compliance with new regulations under the Virtual Asset User Protection Act, effective July 19.

Local media recently reported that the South Korean government has finalized a best practice plan for virtual asset transaction support. This plan outlines strict new requirements for listing cryptocurrencies on domestic exchanges. The current system, where exchanges conduct their own internal reviews, will be supplemented by a stricter review process established by the authorities.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

The new regulations’ central focus is listing screening. Under the current system, exchanges individually review and list cryptocurrencies. However, by implementing the best practice plan, authorities will establish standards that all listed cryptocurrencies must meet.

A financial authority official explained that exchanges would review whether to maintain transaction support for each virtual asset every six months. Subsequent reviews would then occur every three months.

“It is inevitable that transaction support will be suspended for virtual asset items that do not meet the standards for maintaining transaction support,” the official added.

Nine key screening requirements are under discussion. These include verifying whether the cryptocurrency format is suitable for listing, assessing issuer reliability, ensuring the presence of user protection mechanisms, evaluating technology security levels, and confirming compliance with domestic laws and regulations.

South Korean authorities will assess issuers’ reliability by examining their information disclosure practices and verifying the cryptocurrency’s circulation. For user protection, authorities will check if an on-chain explorer can track white papers and blockchain activity.

Regarding technical security, cryptocurrencies must have no history of hacking incidents and disclose their smart contract source codes. Additionally, coins and tokens issued directly by exchanges, coins and tokens that conceal transaction history, and other cryptocurrencies violating current laws will be ineligible for listing.

Authorities are also considering qualitative screening requirements. These include subjective and descriptive questions in addition to multiple-choice queries.

Meeting the formal requirements alone will not guarantee the assets’ listing status. Issuers must also demonstrate comprehensive disclosure, a reasonable issuance and circulation plan, and a credible business history.

Even if a cryptocurrency meets all formal requirements, authorities in South Korea may still challenge its listing based on qualitative criteria. However, exceptions exist for assets that have been traded without issues for over two years on well-regulated overseas exchanges.

South Korea is home to 29 domestic crypto exchanges, including Upbit. According to CoinGecko data, Upbit has the 13th-highest trading volume globally.

Read more: 10 Best Altcoin Exchanges In 2024

This regulatory overhaul could significantly impact South Korea’s crypto market. Given that altcoins account for over 60% of the market’s trading volume, the new measures may lead to a substantial contraction of the local crypto market. Coins with low trading volumes and problematic listing disclosures are expected to be the first to be delisted.

The post South Korea to Reevaluate 600 Crypto Listings on Local Exchanges appeared first on BeInCrypto.

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