May 30, 2024
Policy & Regulation

South Korea to Tighten Regulations on Crypto Token Listings

South Korean financial regulators are preparing to implement stricter laws governing token listings on centralized crypto exchanges. The proposed guidelines, which are expected to be released by the end of April or early May, seek to improve security measures and increase transparency in the cryptocurrency market.

Enhanced Security Measures

According to local media site News 1, the new guidelines will restrict the listing of digital assets on domestic exchanges if they have been linked to hacking incidents, unless a comprehensive investigation determines the underlying cause.

This step demonstrates the authorities’ commitment to protecting investors and limiting the risks connected with cyber attacks.

Transparency Requirements

Furthermore, foreign digital assets seeking listing on South Korean exchanges will be required to publish a white paper or technical manual tailored for the local market.

However, tokens already listed on licensed exchanges for over two years may be exempt from these stringent criteria, providing a degree of continuity for existing listings.

Mandatory Disclosure

In a bid to enhance transparency, the directives may also compel exchanges to delist cryptocurrencies if issuers fail to adequately disclose vital information, such as discrepancies in circulation figures.

This measure aims to prevent market manipulation and protect investors from fraudulent activities.

Stakeholder Consultation

The South Korean government has been actively seeking input from local exchanges and industry stakeholders in formulating these guidelines.

The Financial Supervisory Service has been instrumental in gathering feedback since late 2023, collaborating closely with organizations such as the Digital Asset Exchange Association.

Legislative Framework

The move to tighten regulations comes in the wake of recent legislative updates, including amendments to the Virtual Asset Users Protection Act introduced in early February.

These amendments entail severe penalties, including imprisonment and hefty fines, for violations, reflecting the government’s resolve to uphold regulatory standards and accountability within the crypto sector.

Enforcement and Oversight

Recent efforts by South Korean authorities to crack down on tax evasion and illicit activities in the crypto space have yielded significant results.

The Gyeonggi Provincial Tax Justice Department reported substantial collections from non-declared taxes, aided by a digital tracking system targeting crypto accounts.

Additionally, the Financial Intelligence Unit disclosed a notable increase in flagged suspicious transactions, underscoring the importance of robust regulatory measures in safeguarding the integrity of the market.

As South Korea continues to navigate the evolving landscape of digital assets, the forthcoming guidelines signify a proactive approach towards fostering a secure and transparent environment for cryptocurrency trading.

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