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South Korea’s regulatory authority has asked the cryptocurrency exchanges to ban the coins that exchange issues themselves. These exchange tokens are the tokens that are issued by the exchange and give benefits to the holder.
South Korea doesn’t seem to stop nabbing the neck of the crypto exchanges that are faulty. In a recent incident, the South Koreans regulatory authorities are tightening their grip and asked the exchanges to ban the coins that exchange issues themselves.
The increased regulatory scrutiny that falls under South Korea’s cryptocurrency space in recent times appears to have extended with the ban of exchange tokens. These exchange tokens are the tokens that are issued by the exchange and give benefits to the holder. The benefit could be either through reduced trading fees, regular token burns or other means.
As per the report by Arirang, the regulatory authority has prohibited the crypto exchanges from handling any coins or assets issued by themselves. As per the law, any assets issued by family members, spouses or distant relatives will also be banned. This law is expected to come into effect by June 26.
Businesses to face harsh punishments
As per the report, the businesses which do not comply with the new regulations will have to bear the punishment of suspending their operations and a fine of up to $88,000. The Financial Intelligence Unit (FIU) of South Korea has informed almost 33 cryptocurrency platforms about the upcoming field consultation program. This will be done by the authorities by September 24.
Regulators have earlier asked the exchanges to delist the privacy coins. This was first announced in November 2020. A manual has also been made for the exchanges to understand how they should follow the rules and regulations once the crypto-specific laws are promulgated.
Loss of coins
Upbit, one of the exchanges in South Korea after the reports, has delisted a number of coins and issued strident investment warnings on another 25 assets. This move has caused a 14% decrease in the list of coins on the exchange. Now, the exchange will no longer accept inbound deposits for the 25 coins mentioned in the warning.
Upbit has also informed that the exchange will further review the assets to decide on whether to delist them or not. The deadline for it is June 18.
South Korea has been tightening its grip on the cryptocurrency market for some time now. The attempts that are made within its borders have seen regulators demanding information security management system certification from the crypto trading platforms. The certificate will act as a license to operate in the region. Out of 20 exchanges in the list, 11 exchanges have already delisted tokens or issued warnings.
There are many tokens that do not operate on a proprietary blockchain. So the regulatory authority will stretch the exercise of banning the tokens in the coming days or weeks until they clean up all the coins.
The clean-up drive
In a move to regulate the exchanges in South Korea, FIU has earlier asked the crypto exchanges of the country to file the application to obtain a license to work smoothly and inform them of any suspicious activity or transactions happening on their platform.
The role of FIU is very crucial in combating suspicious activities and putting an end to them. But this could only be done, when the country’s exchanges inform them of the suspicious activities immediately when they suspect something wrong is happening. They require exchanges to flag and inform about any unusual-looking transactions happening on their platform within three working days. Also, all the transactions’ value should be reported in traditional currency (KRW).
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
