South Korea Announces Regulation to Initiate Major Cryptocurrency Delisting
Financial regulators in South Korea are currently trying to add protocols to end trading in listed cryptocurrencies. The upcoming “Best Practices for Virtual Asset User Protection Act Compliance” will mark the delisting of many cryptocurrencies. Regulators said this crypto regulation will be released in early June.
Components of Upcoming Crypto Regulation in South Korea
A person from South Korea’s Financial Supervisory Service explained on May 10 that the upcoming rules will include criteria for listing virtual assets. Additionally, the regulation will also include directives regarding the decision-making process regarding the continuation of trading in currently listed virtual assets. They also emphasize that the aim is to create a framework for delisting certain virtual asset issuers in case of any problems.
However, guides will be available between late May and early June. As of now, South Korea’s Financial Supervisory Service is drafting guidelines to facilitate self-regulation among crypto exchanges ahead of the enactment of the Virtual Asset User Protection Act in July. Key components will include standards for virtual asset issuance volume, distribution volume, and transaction support.
It will also consider measures such as banning the listing of virtual assets with a history of hacking. Additionally, the regulation will also set requirements for Korean whitepapers and technical guides for overseas virtual assets.
Currently, the Virtual Asset User Protection Act is in its infancy. Therefore, an official from the Financial Supervisory Service pointed out the inherent limitations in regulating virtual asset issuers and distributors. “The Virtual Asset User Protection Law is still in its early stages, so it is inevitable that there will be limitations in regulating virtual asset issuers and distributors,” he said, according to The Korea Economic Daily.
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DAXA’s Stance on Crypto Regulatory Review
Efforts are also ongoing to establish self-regulatory measures such as best practices and guidelines to address this deficiency in South Korea. The Financial Supervisory Service’s decision to introduce such best practices stems from criticism of the effectiveness of the Digital Asset Exchange Alliance’s (DAXA) joint listing guidelines announced last year.
“DAXA has guidelines for identifying and delisting precautionary stocks, but major exchanges constantly adopt a laissez-faire attitude even if they do not comply with them,” said Min Byeong-deok, a member of the Democratic Party of Korea. In response, Min Byeong-deok condemned the neutralization of self-regulation. “It became neutral and self-regulation became meaningless,” he said.
Meanwhile, DAXA announced that its member companies are not subject to the guidelines. He also emphasized member companies’ autonomous review and decision-making process regarding transaction support elements. “When a problem is detected in a member company’s transaction support item, it is investigated in accordance with procedures, but the review process and decisions are made by each member company,” a DAXA official said.
Additionally, the expected consequences of the upcoming announcement of best practices for listing virtual assets include the establishment of listing policies for local virtual asset exchanges. The reason behind this possibility is the authoritative nature of the guidelines, as opposed to the voluntary nature of advisory bodies such as DAXA.
Also Read: Kraken Urges SEC to Dismiss Allegations of Unregistered Securities Trading
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