South Korea’s financial authorities will issue new guidelines imposing stricter regulations on tokens listed on CEXs, according to reports from news1. The listing of hacked tokens that have not yet resolved security issues may be blocked and the tokens may need to design specific white papers for local markets.
Cryptocurrencies with a hacking history cannot be listed on domestic exchanges unless the cause is clearly identified. Furthermore, overseas virtual assets can only be listed on Korean exchanges if a white paper or technical manual has been published for the markets of South Korea.
What are the standard?
Financial Supervisory Service has been preparing listing guidelines by receiving opinions from exchanges such as Digital Asset Exchange Association (DAXA) since the second half of last year. Before the implementation of the Virtual Asset User Protection Act in July, it was judged that the authorities should prepare standards along with the joint listing review guidelines prepared by Daksa.
During the enactment of the Virtual Asset User Protection Act, this was also included in the accompanying opinion. Support was given for a common listing procedure for crypto exchanges in the subsidiary opinion. Therefore, the authorities are preparing all guidelines and listening to exchanges’ opinions.
If the cause of the incident hasn’t been explained or the damage hasn’t been repaired, cryptocurrencies with a history of hacking or security issues can’t be listed.
There have been several hacking incidents since last year, including Galaxia (GXA), Orbit Chain (ORC), Somesing (SSX), and Play Dapp (PLA).
Due to the failure to properly identify the hacking cause, most of these coins were delisted from Daksa-affiliated exchanges. Galaxia was the only company to recover the damage through ‘buybacks’ and maintain transaction support at Gopax. If there’s a history of hacking like this and the cause isn’t clearly identified or resolved, re-listing is unlikely to happen in the future.
There’s also a requirement to publish a white paper or technical manual when listing overseas crypto for regional use. Hence, it can be interpreted as an attempt to solve the information asymmetry between overseas and domestic crypto projects.
What are the crypto exceptions?
Exceptions were also included for crypto traded on overseas crypto exchanges for over two years that allowed certain listing criteria to be skipped. The authorities also defined the standards for ‘overseas crypto business operators’ at this time.
‘Foreign virtual asset business operators’ are only exchanges that have been legally licensed in their country of operation. The ‘benefit’ of skipping some standards when listing in Korea will only be granted if overseas crypto business operators have supported transactions for more than 2 years.
Delisting standards are also included in these guidelines. Transaction support may be terminated for non-compliance with disclosure obligations. In this case, the actual distribution volume differs from the announced volume.
