Recently, the Financial Supervisory Service (FSS) in South Korea has come forward to clarify its role in the removal of digital assets from local cryptocurrency exchanges. There were reports circulating on June 17th that the FSS had instructed registered exchanges such as Upbit, Bithumb, and Gopax to evaluate several tokens listed on their platforms. This directive was in line with the Virtual Asset User Protection Act, which requires exchanges to comply with strict regulations and conduct regular assessments of the tokens they list.
According to the new law, exchanges are now required to adhere to stricter guidelines for listing tokens and reevaluate existing tokens biannually. The evaluation process includes assessing the reliability of the issuing entity, user protection measures, technology, security standards, and regulatory compliance of the digital assets. Failure to comply with these regulations could result in severe penalties, such as a minimum one-year jail term or fines up to five times the illegal profits generated from the venture. This has raised concerns among investors as up to 600 altcoins could potentially face delisting during these reviews, leading to a wave of panic selling.
In response to the rumors circulating regarding the delisting of digital assets, the FSS has refuted claims of direct involvement in the process. The regulatory body clarified that its role is focused on establishing listing standards rather than overseeing the review process. The FSS stated, “Financial authorities inspect virtual asset operators and do not directly review stocks. We participated in the initial processes to provide support in creating best practices, but the announcements regarding listing or delisting will be made by the exchanges and DAXA.”
There have been reports suggesting that the FSS is considering establishing a new division dedicated to cryptocurrency regulation. This division would be responsible for developing policies, overseeing regulatory compliance, and setting up a framework for the rapidly growing cryptocurrency sector in South Korea. This move indicates the growing importance of cryptocurrencies in the financial landscape and the need for specialized regulatory oversight to ensure investor protection and market integrity.
The clarification provided by the FSS regarding its role in cryptocurrency regulation sheds light on the stringent compliance measures being implemented in the South Korean market. As the cryptocurrency industry continues to evolve and expand, regulatory authorities are taking proactive steps to safeguard investors and maintain the integrity of the market. Investors and exchanges alike must stay abreast of regulatory developments to navigate the evolving landscape of digital assets in South Korea.
