Crypto Trading Guidelines and Potential Altcoin Delistings Stir Investor Anxiety in South Korea

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As a seasoned crypto investor with a few scars from the 2021 delistings in South Korea, I can’t help but feel a sense of unease as the country prepares to enforce new guidelines. The potential for mass delistings based on these new rules is a real concern that has been weighing heavily on my mind.

Starting 19 July 2024, South Korea’s financial regulators will introduce “New Virtual Currency Trading Regulations.” As an analyst, I can tell you that this upcoming policy change has sparked considerable unease among cryptocurrency investors. The primary concern revolves around the possibility of certain altcoins being delisted from local exchanges.

As a financial analyst, I’ve come across some intriguing news from South Korea’s Business Point report. The Financial Supervisory Service (FSS) is planning to unveil “Virtual Asset Trading Best Practices” soon. These guidelines are designed for local cryptocurrency exchanges to ensure robust trading support. Insiders in the industry suggest that these practices could be enforced promptly, even before the new law comes into effect. The goal here is to bolster the trustworthiness and credibility of the digital asset market by establishing standards for continuous trading support and regular maintenance checks.

Among investors, there’s a notable worry that these new guidelines could result in another wave of delistings similar to what occurred in 2021. During that time, Upbit, a prominent South Korean cryptocurrency exchange, unexpectedly stopped trading for 24 different virtual currencies. Reasons included insufficient technical capabilities, hidden distributions and sales, global liquidity shortages, and murky disclosure of information. This sudden action brought about sharp price drops in the affected altcoins and instability throughout the market.

Since 2021, the cryptocurrency market’s overall dependability has significantly enhanced. Consequently, the possibility of massive delistings from exchanges like Upbit becomes less probable due to the potential repercussions for these platforms. To alleviate investor concerns, Upbit has highlighted its routine maintenance checks and clear delisting standards, labeling rumors of impending large-scale delistings as unsubstantiated.

Although these reassurances are in place, there is still a risk of abrupt delistings due to the new guidelines. Exchanges may discontinue trading for cryptocurrencies with security vulnerabilities or questionable circulation data. The consequences could extend beyond the affected digital currencies and negatively impact market confidence, potentially causing declines in other virtual currencies as well.

From a different perspective, some industry insiders contend that the present degree of anxiety is unwarranted. They maintain that adhering to the best practices could result in the removal of insolvent virtual currencies, but these regulations might bolster market trustworthiness in the long run. This viewpoint is shared by Kim Ji-won, a researcher at KB Securities, who posits that the guidelines will function as a self-imposed regulatory mechanism, collaborating with the Virtual Asset User Protection Act and instigating a cleansing process within the market.

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2024-06-27 10:06