Twenty South Korean cryptocurrency exchanges and their representative organizations jointly issued a new code of conduct for domestic cryptocurrency companies on Tuesday, which involves re-evaluating more than 1,300 cryptocurrencies already traded on local platforms.
The newly announced self-regulatory standards for industry players will go into effect on July 19, the same day that South Korea’s first regulatory framework for cryptocurrency investor protection goes into effect, industry body Digital Asset Exchange Association (DAXA) said in a press release.
“When new cryptocurrencies are listed in the future, exchanges will be required to review the tokens on both a formal and qualitative basis,” the press release said, outlining the rules the industry association will impose on its members.
The formal requirements that set out the criteria for issuer credibility, investor protection measures, security and regulatory compliance are non-negotiable, meaning that tokens that do not meet any of the criteria will not be listed for trading. The rulebook adds that “qualitative requirements comprehensively consider and review projects across a range of factors.” The review will be conducted quarterly.
The new standards also require local exchanges to establish an independent decision-making body for token listings and to execute all major listing and delisting decisions in accordance with the latest set of rules. The decision-making process for token listings must be documented and stored for 15 years to increase fairness and transparency, the press release said.
Revaluation of existing tokens
Existing cryptocurrency tokens already traded on domestic exchanges will also be reviewed, but with a six-month grace period, the publication noted. As of the end of 2023, there were 1,333 cryptocurrency tokens traded in South Korea.
Nonetheless, DAXA said that these investigations are unlikely to result in mass delistings of altcoins, as major cryptocurrency exchanges in South Korea have already been complying with the rules.
South Korea has one of the largest cryptocurrency markets in the world and is also known for its large altcoin market. In Q1 2024, the South Korean Won was the most used fiat currency for cryptocurrency trading. Kaiko data is displayedUpbit, the largest exchange in Korea, said it processed $30 billion worth of cryptocurrency transactions in June. Data from The Block.
The country’s first cryptocurrency law – Virtual Asset User Protection Act — It aims to eradicate illegal market activities such as using non-public information for cryptocurrency investment, manipulating market prices, and participating in fraudulent transactions. In addition, cryptocurrency service providers must protect at least 80% of deposits in cold storage to protect user funds and subscribe to insurance programs to compensate potential users in the event of a security breach.
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