To ensure compliance with the upcoming Virtual Asset User Protection Law, the South Korean financial authorities plan to reevaluate the listing status of approximately 600 cryptocurrencies traded on domestic exchanges, sparking panic among Korean investors. The Financial Services Commission (FSC) clarified today that they will not directly review individual projects, as this responsibility will be handled by the exchanges and the Digital Asset Exchange Association of Korea (DAXA), with a low probability of large-scale delistings.
Last June, the South Korean National Assembly passed the Virtual Asset User Protection Law, introducing a regulatory framework for virtual assets. On December 11 last year, the Financial Services Commission (FSC) proposed detailed rules under this law, set to take effect on July 19 this year.
According to reports from South Korean media yesterday, in order to comply with the forthcoming Virtual Asset User Protection Law, South Korean financial authorities plan to reassess the listing status of approximately 600 cryptocurrencies traded on domestic exchanges. Tokens that do not meet the standards will be designated as warning tokens and subsequently delisted.
The 29 virtual asset exchanges reported to financial authorities, including Upbit, Bithumb, Coinone, Korbit, and Gopax, must undergo preliminary reviews to determine the maintenance of all token listings. An official from the financial authorities stated that the Korean virtual asset listing review decision-making body is expected to review the following nine aspects:
1. Reliability of the issuer
2. User protection measures
3. Technology and security
4. Compliance with laws and regulations
5. Capacity and social credit of entities related to issuance, operation, and development
6. Important disclosures
7. Potential conflicts of interest and solutions
8. Security of ledgers and virtual assets, and checking for centralized risks
9. Normal trading in overseas markets meeting conditions for over two years
The news released yesterday also mentioned a list circulating on Korean social media of “projects that may be delisted,” referring to 16 altcoins. As a result, about half of the cryptocurrencies in the Upbit Korean market experienced sharp price drops of 10% to 20%.
FSC clarified that these contents were additional materials submitted to the National Assembly when the Virtual Asset Law was being formulated, where the Assembly requested FSC to assist in developing unified exchange listing standards. FSC emphasized that the recent significant price drops were due to investors’ overinterpretation of the impending law and predicted that the likelihood of large-scale delistings is actually very low.
A related person from an exchange stated that detailed listing rules have not been issued yet, so it cannot be fully confirmed. She emphasized that the review to maintain listings is not a new practice but a routine task conducted all along, not a sudden action. She also mentioned that the list of expected delistings circulating recently has previously been shared multiple times in related communities, mainly targeting domestically traded “kimchi coins,” but most of it is unsubstantiated content.