According to reports from local media outlet News1, the move is part of the country’s efforts to improve transparency and security within its rapidly growing digital asset market.
The South Korean government is about to implement new guidelines to impose stricter regulation for token listings on centralized crypto exchanges (CEX) starting next month. The upcoming guidelines, spearheaded by South Korea’s financial authorities, aim to strengthen investor protection and uphold market integrity.
The rules are scheduled to be published in late April or early May. Once implemented, crypto exchanges inside and outside the country will be required to comply with the guidelines. Under the new rules,
South Korea-based crypto exchanges cannot list tokens associated with projects that have been exploited in the past, unless thorough investigations into root causes and security resolutions are completed. The guidelines also propose strict criteria for foreign crypto projects seeking to list on South Korean exchanges.
According to the report, these projects are required by law to publish detailed technical documents or technical manuals specifically designed for the South Korean market before being accepted for trading on exchanges. However, exemptions may apply to tokens traded on licensed exchanges for more than two years, preventing them from meeting the strict new criteria.
Authorities May Order Exchanges to Delist Certain Cryptocurrencies
The report also revealed that, under the new guidelines, authorities may decide to order exchanges to remove certain cryptocurrencies from their platforms if the token issuer does not provide complete information about the digital asset.
The new guidelines could prevent tokens issued by projects that have suffered hacking attacks and have yet to resolve security issues from being listed on local exchanges.
Additionally, the law allows authorities to hold crypto exchanges responsible for ensuring accurate disclosure of essential information by token issuers. Failure to provide complete information, including discrepancies between actual circulation figures and publicly disclosed amounts, may result in tokens being removed from exchanges.
South Korean financial authorities are currently seeking feedback from local exchanges to shape the new guidelines. According to the report, collaborative efforts between the country’s Financial Supervisory Services and stakeholders such as the Digital Asset Exchange Association have been instrumental in refining listing guidelines and fostering a robust regulatory framework.
Meanwhile, South Korea has one of the most active crypto markets in the Asia Pacific region. Upbit, the largest and most popular digital asset trading platform, recorded a 24-hour trading volume of $15 billion on March 5, 2024.
In July 2023, the company surpassed Coinbase and OKX in trading volume. The exchange saw a 42.3% increase in spot trading, reaching a record of $29.8 billion, while Coinbase and OKX saw their volumes decline by 11.6% and 5.75%, reaching $28.6 billion. of dollars and 29,000 million dollars, respectively.
Tougher Regulations in South Korea
South Korea has been evaluating and adopting new, stricter rules for the digital asset sector. In mid-2023, South Korean lawmakers passed a bill for consumer protection of the cryptocurrency market. Made up of a series of rules, the legislation covers market manipulation, illegal trading and other violations with digital assets that can lead to criminal sanctions or fines, depending on the severity of the crime.
These regulations, which will come into force in mid-2024, introduce more severe penalties for actors who commit crimes related to cryptocurrencies, including the possibility of a life-long prison sentence.
Local authorities are also reportedly evaluating a ban on the use of credit cards for the purchase of cryptocurrencies, while analyzing whether to approve the listing of Bitcoin exchange-traded funds (ETFs) in the local market.
By Leonardo Perez
