South Korea to Reevaluate 600 Crypto Listings on Local Exchanges

South Korea’s regulatory authorities are set to reassess approximately 600 cryptocurrencies currently listed on domestic exchanges. This review is in response to the new regulations outlined in the Virtual Asset User Protection Act, which came into effect on July 19. The government has finalized a best practice plan that introduces stricter requirements for listing cryptocurrencies on local exchanges. Previously, exchanges were responsible for conducting their own internal reviews, but now they will have to adhere to the standards established by the authorities. The focus of the new regulations is on screening listings, with exchanges required to evaluate the suitability of each virtual asset for transaction support every six months, followed by subsequent reviews every three months. Any cryptocurrencies that fail to meet the established standards will have their transaction support suspended. The authorities are currently discussing nine key screening requirements, including assessing issuer reliability, technology security levels, and compliance with domestic laws and regulations. The issuers’ disclosure practices, cryptocurrency circulation, and user protection mechanisms will also be verified. Additionally, the assets must meet new security standards, such as having no hacking incidents in the past and disclosing their smart contract source codes. Coins and tokens that conceal transaction history or violate current laws will not be eligible for listing. Qualitative screening requirements are also under consideration, involving subjective, descriptive, and multiple-choice questions. While meeting the formal requirements is necessary, South Korean authorities may still challenge a cryptocurrency’s listing based on qualitative criteria. However, exceptions will be made for assets that have been traded without issues for over two years on well-regulated overseas exchanges. The crypto market in South Korea, home to 29 domestic exchanges, including Upbit, could be significantly impacted by these regulatory changes. Altcoins, which make up over 60% of the market’s trading volume, may experience a contraction as assets with low trading volumes and problematic listings are expected to be delisted.