South Korea’s Financial Supervisory Service (FSS) has clarified its role regarding the rumored delisting of numerous digital assets from local crypto exchanges
On June 17, reports emerged that the FSS had ordered registered crypto exchanges, including Upbit, Bithumb and Gopax, to evaluate various tokens on their platforms. This directive is in line with the Virtual Asset User Protection Act, which mandates strict compliance and regular reviews of listed tokens.
Under the new law, exchanges must follow stricter guidelines for token listings and reassess existing tokens semi-annually. They are required to evaluate the issuing entity’s reliability, user protection measures, technology, security standards and regulatory compliance of these digital assets.
The legislation also imposes severe penalties for non-compliance, including a minimum prison sentence of one year or fines ranging from three to five times the illegal profits they generated from the business. Consequently, investors are concerned that as many as 600 altcoins will be delisted during these reviews, which could trigger massive panic selling.
In response to these rumors, the FSS denied direct involvement in the listing or delisting of virtual assets on exchanges. The regulator emphasized that this is limited to setting standards for listing, and not to overseeing the rating process. There stood:
“Financial authorities inspect virtual asset managers and do not rate the stocks directly. We participated [in the initial processes] as there was a request to provide support in creating best practices, but the announcements will be made by the exchange and DAXA.”
Furthermore, there are reports that the FSS is planning to create a new division dealing with crypto regulation. This division would be responsible for policy development, regulatory oversight and setting up a framework for the fast-growing sector.