South Korea to Introduce Stricter Regulations for Crypto Token Listings
Summary:
South Korea's financial authorities are preparing to introduce more stringent regulations for digital asset listings on centralized exchanges. The proposed rules will prevent tokens associated with hacking incidents from listing unless the main issue has been completely investigated, and foreign digital assets shall be listed only with a Korean-market-focused whitepaper or manual. Tokens listed for over two years may be exempt. The guidelines also demand exchanges to delist cryptos if issuers fail to provide key information. Financial Services Commission oversees the initiative, inspired in part by the industry crisis involving Terraform Labs. Laws have been updated to include severe penalties for violations.
South Korea's monetary authorities are set to introduce stricter regulations for the listing of tokens on centralized digital asset exchanges before the close of April or at the latest, in the first part of May. Reporting from News 1, a local media outlet, reveals that these authorities will prevent the listing of any digital assets that have previously been involved in hacking episodes on local exchanges unless the core issue has been entirely discovered. Foreign digital assets will only be accepted for listing on domestic exchanges if a white paper or technical manual targeted at the Korean marketplace is available. However, there may be exceptions for tokens already listed on a licensed exchange for more than two years which need not comply with these updated guidelines. The new rules may also demand exchanges delist any cryptocurrencies if their issuers do not provide complete disclosure of crucial information such as the real versus stated circulation amounts.
It was reported that the South Korean government is currently soliciting input from local exchanges. Since late last year, the Financial Supervisory Service has been developing these listing regulations by asking for the opinions of organizations like the Digital Asset Exchange Association (DAXA). This initiative is overseen by the Financial Services Commission (FSC), a governmental body responsible for managing and regulating South Korea's financial institutions and markets.
In early February, the South Korean government revised the Virtual Asset Users Protection Act. This updated law triggers severe criminal penalties and fines for violators, such as a prison sentence of over a year or a fine amounting to three to five times the illicit earnings.
This legislation was sparked by the devastating industry crisis that involved Terraform Labs and its founder, Do Kwon, who is a South Korean national. The collapse of Terra in May 2022 led to a loss of over $450 billion.
The Gyeonggi Provincial Tax Justice department – the most populated province in South Korea – recovered 6.2 billion won which equates to $4.6 million in undeclared taxes in 2023 by launching a digital tracking system focused on the crypto accounts of tax dodgers.
According to the Financial Intelligence Unit (FIU) of South Korea, domestic digital asset exchanges reported a 49% increase in suspicious transactions in 2023 compared to 2022. On February 14th, the FIU revealed its action plan for 2024, which highlighted key data & strategic initiatives aimed at regulating the cryptocurrency market.
Published At
4/5/2024 1:55:51 PM
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