The regulatory agencies of South Korea have ordered local cryptocurrency trading platforms to review local token listings.
The notification has indicated that FSC has notified 29 crypto exchanges to comply with the new regulatory policy. The list of exchanges that have received the notification from the regulatory agencies is inclusive of the biggest market holders.
User Protection Legislation
The firms that have received the notification are to evaluate tokens listed on their platforms and decide if they are to continue granting support to the listed digital assets. The regulatory agencies in South Korea have introduced this new policy as part of the virtual asset user protection legislation.
An article published in The Korea Times claims that the new regulation is set to take effect for exchanges operating within South Korea by 19th June.
This law also proposes legal repercussions and fines for violating parties. As per the legislators, the violators may receive a fixed-term imprisonment time of more than a year or 3 to 5 times of their total profit.
As per the new laws, the 29 trading platforms have to review a total of 600 digital tokens listed on their local platforms. This legislator will require crypto exchanges to comply with a stricter review requirement for local listings.
South Korean Trading Platforms to Undertake Token Reviews
The regulated trading platforms operating within South Korea now have to undertake a stricter and more restrictive token listing criterion. The new legislative requirements ensure that the local trading platform has to review their current token listings at a regular interval after every 6 months. At the same time, the trading platforms have to carry out maintenance and prepare a review report every 3 months.
The government of South Korea has also issued a new update of the Virtual Asset User Protection Act as early as February. In April, FSC alluded to the stricter regulatory policy requirements for the upcoming tokens listings on the local trading platforms.
The FSC also recommended some important steps to improve the monitoring and security requirements.
One of the recommended policy requirements for the local exchange platforms is banning token listings from compromised projects. This new policy could restrict token listings from projects that have suffered from security breaches and dealing with unresolved security threats issued by the local trading platforms.
FSC to Make New Crypto Regulatory Policies
The FSC is reportedly working on issuing more crypto policies in the upcoming days. On this account, trading platforms operating within the local jurisdictions may have to deal with additional restrictions and regulatory obstacles in July.
At the same time, authorities have continued to call for changes in the organizational structure of crypto firms to allow them implementing regulatory changes with greater efficiency.
FSC is also planning to establish a new bureau with an exclusive focus on virtual assets and managing the overall regulatory framework of the blockchain industry. On this account, an official proposal has been published on 17th June and set for a review on 18th June.
Another report article shared an update from the South Korean Binance affiliate namely Gopax. The trading platform has a payable balance of 100 billion Korean won in unpaid customer staking reserves.
Gopax is among the top-5 trading platforms operating in South Korea by market share. The platform sold the user deposit claims for half the face value in August 2023.
On 27th March, South Korean publication Hankyung or Korean Economic Daily reported that Gopex has an unsettled 70 billion won or $51.4 million balance towards its customers. The payable was generated after the Genesis Global collapse in November 2022.
Since that time, Gopax has reportedly released 50% in unpaid user funds. However, the firm still has an unpaid balance of 35 billion at the time which has now ballooned into 100 billion won. Korean Times report published in March reported that Gopax is dealing with financial uncertainty on account of capital impairment and increased debt liabilities.
