Regulators in South Korea will reassess cryptocurrencies currently available for trading in the nation. This comprises approximately 600 cryptocurrencies.
Local media publisher Chosun has revealed that the new standards are part of the nation’s regulations under the Virtual Asset User Protection Act. The legislation is set to go live on July 19.
Cryptocurrencies under scrutiny
South Korean authorities have created a framework dubbed the best practice plan for supporting virtual asset transactions as a part of the upcoming act.
The framework lists several criteria that the nation must abide by for cryptocurrencies listed.
The move aims to amend the existing system where crypto exchanges asses cryptocurrencies at the time of listing. However, the new format would put in place a common standard for all crypto assets.
Currently, nine screening requirements are being discussed. Cryptocurrencies will be scrutinised based on their compliance with domestic laws, user protection measures, security measures, etc.
Regulators will probe the cryptocurrency issuers to asses their information disclosure practices as a part of the evaluation. Further, it must be possible to track the crypto asset via an on-chain explorer.
Other checks include verifying the circulation of the cryptocurrency and reviewing white papers.
One crucial requirement for cryptocurrencies includes having no history of security hiccups. Projects would also have to disclose their smart contract codes.
Cryptocurrencies issued directly by exchanges and those that mask their transactions will be de-listed.
Periodic reviews to be conducted
However, just complying with the aforementioned criteria won’t entitle a crypto asset to be listed. Additional qualitative criteria would be in place. Regulators will have the final say.
It must be noted that some exceptions have been made for cryptocurrencies that have been trading for more than two years on regulated platforms without any incidents.
Further, tokens issued by decentralized autonomous organizations (DAOs) are expected to not meet the standard requirements.
According to an official, the exchanges would initially review the cryptocurrencies over a six-month period. Subsequently, maintenance reviews would be conducted every three months.
The official noted:
It is inevitable that transaction support will be suspended for virtual asset items that do not meet the standards for maintaining transaction support.
The framework comes at a time when the South Korean cryptocurrency sector is undergoing a major overhaul.
Last week, the Financial Services Commission (FSC) notified the public that it may consider some nonfungible tokens (NFTs) as Virtual assets. As such, those issuing NFTs classified as virtual assets are now required to report to the FSC.
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