- The South Korean cryptocurrency market faces a significant regulatory overhaul.
- Starting in July, approximately 600 crypto assets will be evaluated against new standards, with non-compliant ones potentially being delisted.
- A South Korean financial authority representative stated: “We will allow crypto asset exchanges to assess whether to continue supporting the trading of crypto asset items that have been traded for six months. Subsequently, maintenance reviews will be conducted every three months. Crypto assets that do not meet the standards for transaction support will inevitably have their trade support suspended.”
The South Korean crypto market is on the brink of transformation with new regulations affecting over 600 crypto assets.
Major Developments for Cryptocurrencies in South Korea
According to local sources, financial regulators will release best practice plans for supporting crypto transactions with the launch of the New Crypto Asset User Protection Act on July 19. This requires platforms such as Upbit, Bithumb, Coinone, Korbit, and Gopax to conduct initial evaluations to determine which assets will continue to be listed. An official from the financial authorities detailed the review process, emphasizing periodic maintenance checks to ensure compliance with transaction support standards.
Key Factors in the Review Process
Authorities have outlined specific parameters for the review. Exchanges will assess various aspects including the reliability of issuing entities, user protection measures, technical security, and legal compliance. Assets failing to meet these criteria may face suspension from trading support. However, there are alternative review methods for assets that do not meet typical criteria, such as those issued by Bitcoin and DAOs. Moreover, crypto assets that have been traded in well-regulated overseas markets for over two years might receive more lenient assessments.
Implications for the Global Crypto Exchange Market
This regulatory shift follows challenges faced by global exchanges like Crypto.com and Binance in establishing a solid foothold in South Korea due to stringent regulatory barriers. Critics argue that the financial authorities’ ‘crypto isolation’ strategy has fostered a monopolistic environment favoring domestic exchanges, thereby restricting users from benefiting from lower transaction fees. According to CoinGecko’s analysis, leading local exchange Dunamu holds a 65% market share, while the second-largest exchange Bithumb controls nearly 30%. These regulatory changes are poised to reshape South Korea’s cryptocurrency landscape, affecting both domestic exchanges and a multitude of crypto assets.
29 Exchanges to Begin Review Process
In conclusion, the Financial Services Commission (FSC) of South Korea has mandated that 29 registered crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax, must regularly evaluate whether to continue listing the tokens they support. As reported by the Korea Times, the new crypto asset user protection law, set to come into effect on July 19, aims to safeguard users by imposing heavy penalties for violations. These penalties can include fixed prison sentences of more than one year or fines ranging from three to five times the amount of illegal profits. Under this legislation, all 29 registered crypto exchanges are required to review the 600 crypto assets listed on their platforms.
Conclusion
South Korea’s impending regulatory changes herald a new era for its cryptocurrency market. The stringent evaluation process aims to enhance user protection and ensure legal compliance. As the market adjusts to these new standards, both domestic and global exchanges will face significant shifts, potentially reshaping the crypto landscape in South Korea. Investors and stakeholders must stay informed and adapt to these evolving regulations to navigate the market effectively.
