Recently, the Financial Supervisory Service (FSS) of South Korea clarified its role in the removal of digital assets from local cryptocurrency exchanges. Reports surfaced on June 17 alleging that the FSS had directed registered exchanges such as Upbit, Bithumb, and Gopax to assess various tokens on their platforms. This directive was in line with the Virtual Asset User Protection Act, which requires exchanges to adhere to strict compliance measures and conduct regular evaluations of listed tokens.
Under the new law, exchanges are obligated to follow more stringent guidelines for token listings and reevaluate existing tokens twice a year. They must assess factors such as the reliability of the issuing entity, user protection measures, technology, security standards, and regulatory compliance of digital assets. Non-compliance with these regulations could result in severe penalties, including a minimum one-year jail term or fines up to five times the illegal profits generated by the exchange.
The announcement of these regulatory changes has sparked concerns among investors, with fears that up to 600 altcoins may be delisted during the review process, leading to widespread panic selling. However, in response to these rumors, the FSS denied direct involvement in the listing or delisting of virtual assets on exchanges. The regulator clarified that its role is limited to setting listing standards, not overseeing the review process. It stated that financial authorities only inspect virtual asset operators, leaving the decisions on listings to the exchanges and the Digital Asset Exchange Association (DAXA).
In addition to the clarification of its role, there are reports that the FSS is considering establishing a new division dedicated to the regulation of cryptocurrencies. This division would be tasked with developing policies, providing regulatory oversight, and creating a framework for the growing cryptocurrency sector.
The involvement of the FSS in regulating digital assets in South Korea has significant implications for cryptocurrency exchanges and investors. While the clarification of the FSS’s role provides some reassurance, the strict compliance measures and potential delistings of altcoins underscore the rapidly evolving regulatory landscape surrounding cryptocurrencies. The creation of a dedicated division for crypto regulation further indicates the government’s commitment to overseeing and shaping the future of the digital asset market in the country.
Leave a Reply