Cryptocurrency exchanges in South Korea said they are reviewing over 600 tokens listed for trading

Cryptocurrency exchanges operating in South Korea are said to be preparing for an internal audit. As part of this process, over 600 cryptocurrencies will reportedly be reviewed to see if they meet regulatory standards set by Seoul. The goal is to protect South Korea’s investment community and its financial ecosystem from the risks posed by unregulated and volatile cryptocurrencies. The exchanges will also conduct a maintenance review of their respective companies to identify any security or cyber threats that may be looming over their businesses, as per the report.

South Korea identifies risky tokens

A total of 29 cryptocurrency exchanges operate in South Korea, including Upbit, Bithumb, Coinone, Korbit, and Gopax among others. The decision of these exchanges to conduct checks on crypto tokens listed for trading on these exchanges is influenced by the Virtual Asset User Protection Act, which will come into effect on June 19 in South Korea, a relationship from the South Korean publication Chosun said.

Crypto tokens that do not meet regulatory standards will reportedly be removed from the exchange. The exchanges are therefore said to provide delisting information to their respective user communities. Crypto tokens listed less than six months ago are said to be given a stern warning to adhere to the country’s legal requirements before facing expulsion from trading listings.

“We will allow virtual asset exchanges to review whether to maintain trading support for virtual asset items that have been traded for six months. It is inevitable that transaction support will be suspended for virtual asset items that do not meet the standards for maintaining transaction support,” Chosun cited an anonymous source familiar with the matter in the report.

Token review process

Cryptocurrency exchanges preparing to conduct this internal investigation have reportedly identified important points to cover to ensure that all crypto assets are safe for investors to interact with. Audits for these tokens will be conducted based on security, technology level, regulatory compliance, transaction support and past business history.

Transparency of virtual asset operations, market capitalization, as well as total issuance and circulation volume are other metrics linked to over 600 tokens said to be analyzed by exchanges. Exchanges will reportedly establish an alternative screening method for cryptocurrencies issued by decentralized organizations (DAOs), which may be difficult to trade in South Korea.

Additionally, the Virtual Asset User Protection Act in South Korea requires all exchanges to conduct internal maintenance reviews every three months.

South Korea cracks down on risky cryptocurrency habits

The Asian nation has been quite pro-crypto in its approach to the digital asset sector, despite the risks associated with it. With South Korean banks entering the metaverse ecosystems to allow authorities to approve licenses for cryptocurrency companies looking to set up business there, the nation has taken many steps in favor of Web3. The nation classified blockchain-based tokens as “Securities” in February 2023, bringing them under its securities laws.

It is, however, noteworthy that the government has remained vigilant in terms of oversight of industry players engaged in the virtual asset sector. In April 2022, authorities conducted investigations on exchanges like KuCoin and Coinex to check whether their operations were legal or not.

In January 2024, South Korean authorities reportedly said purchasing cryptocurrencies via credit cards may soon be banned in South Korea.

Affiliate links may be automatically generated – see our Ethics statement for details.

Fuente