The self-regulation proposal "Best Practices for Virtual Asset Trading Support," introduced in 2019 by 20 South Korean virtual asset exchanges and the Digital Asset Exchange Joint Consultative Body (DAC), is prepared for the implementation of the User Protection Act. These best practices, along with the User Protection Act, will be officially enforced on domestic exchanges starting on the 19th.
Since last month, exchanges have begun piloting these best practices. By the end of last year, approximately 1,333 virtual assets were supported, all of which will be re-evaluated within six months of the new regulations coming into effect. The best practices cover the review and termination of virtual asset trading support (listing), the review process for trading support, and information disclosure.
Background of the Self-Regulation Plan
Regulatory bodies such as the Financial Services Commission and the Financial Supervisory Service, based on parliamentary opinions, requested the virtual asset industry to develop a self-regulation plan in line with the User Protection Act. Consequently, the industry formed the Virtual Asset Trading Support Task Force (TF) and, starting from October 2022, collected opinions from academic and legal experts to voluntarily establish regulations based on the General Guidelines for Trading Support Screening.
By establishing this exemplary standard, the industry has increased transparency in related internal controls, such as creating independent review and decision-making bodies and managing and storing review records. User protection measures have also been strengthened, including the publication of the Virtual Asset Korea White Paper and descriptions of virtual assets, and providing guidance on disclosure media for issuing entities.
User Concerns and Industry Response
The virtual asset industry believes that the possibility of large-scale delisting, a concern for users, will not be high due to the implementation of best practices. South Korea's five largest KRW exchanges have joined the Virtual Asset Trading Support Special Task Force and have proactively applied key review items of the best practices since the end of last year, terminating some virtual asset trading supports that did not meet the standards. From January to June this year, the five major KRW exchanges terminated 39 virtual asset trading supports, and the industry considers the likelihood of large-scale delisting to be low.
Over the next six months, the 1,333 assets supported by the end of last year will be re-evaluated according to the new exemplary standards. Problematic assets will be given six months for re-evaluation, considering the screening preparation process, such as collecting screening data and issuer information.
When trading support ends (delisting), user protection measures are expected to remain at current levels. Exchanges will notify users through their websites about the termination of trading support and provide guidance on the settlement period and handling measures for delisted tokens.
All participating exchanges anticipate that "the implementation of best practices for trading support will serve as an opportunity to establish order in the virtual asset market and increase user trust."
For more analysis, please follow Aibit's media account for real-time updates! This article is for reference only, does not represent any position, and is not intended as investment advice. Investment is risky, caution should be exercised.
Facebook: https://www.facebook.com/aibitcom
X: https://twitter.com/aibitcom
Telegram (CN): https://t.me/aibitcom_cn
Telegram (EN): https://t.me/aibitcom
Telegram (Announcements): https://t.me/aibitcom_announcements
Discord: https://discord.com/invite/aibitcom
Medium: https://medium.com/@aibitcom
Youtube: https://www.youtube.com/@aibitcom