The South Korean "Virtual Asset User Protection Act" is about to take effect: Cryptocurrency exchanges welcome the "window period" for listing new coins

Author: Weilin, PANews

As South Korea's "Virtual Asset User Protection Act" is set to take effect on July 19, major cryptocurrency exchanges in South Korea, represented by Upbit and Bithumb, have accelerated their listing processes ahead of this deadline. The new law brings increasingly stringent expectations for token listings and reviews of existing tokens, prompting these exchanges to expedite their token review processes.

According to publicly available market information, PANews has compiled statistics on the listing activities of South Korea's two major exchanges, Upbit and Bithumb, for the year 2024 up to July 11. Upbit's listing trend shows a peak shape, reaching its highest point in May, clearly influenced by the new regulations. On the other hand, Bithumb had the most listings in January, followed by a lull, but reached a new peak in listings in June. Additionally, three other exchanges—Coinone, Korbit, and Gopax—also concentrated their listings in June, with a total of 17 new tokens.

Furthermore, according to several South Korean media outlets, major exchanges are making further preparations for compliance, and insurance companies are set to launch new virtual asset insurance products in response to the new law.

"Window Period" for Listings Under Pressure from New Law

On July 11, Upbit announced the listing of Galxe (GAL), driving the token's 24-hour increase to 15%. Two days prior, on July 9, Upbit announced the listing of the ENS/KRW trading pair, with ENS briefly rising over 18%. On the same day, Bithumb, the second-largest cryptocurrency exchange in South Korea by trading volume, announced new BRETT and TAIKO trading pairs in the KRW market.

Although these appear to be routine listing activities, some industry insiders have sensed new signals, stating, "It seems that there is a small window period for listings at the two major exchanges before the Korean Virtual Asset Protection Law takes effect."

PANews previously reported that there were rumors of a large-scale delisting of tokens before the new law took effect, but regulatory authorities clarified that they would not directly participate in token review work. Analysts have indicated that the new regulations may make virtual asset trading fairer and more transparent, preventing specific forces from monopolizing profits due to speculative trading, and making the virtual asset trading field more active.

Faced with stricter regulatory expectations, quickly approving the backlog of pending token listings has become a top priority for several major exchanges in South Korea.

Upbit, the industry leader among exchanges, has historically taken a conservative approach to new token listings, but just last month, it listed four new tokens, and in July alone, it has already listed three tokens. According to statistics, as of July 10, 2024, Upbit has listed a total of 20 tokens. In terms of listing trends, Upbit's listings slowed down in March and April, peaked in May with six new tokens.

At Bithumb, the second-largest cryptocurrency exchange in South Korea, 12 tokens were listed in January, but the pace slowed afterward. However, in May and June, Bithumb noticeably accelerated its listing speed, with six tokens listed in May and seven in June.

Notably, between May 28 and May 31, in just four days, Upbit and Bithumb together listed five tokens: $ENS, $AR, $AUCTION, $STG, and $BEAMX, with swift and concentrated actions.

In addition to these two exchanges, other major cryptocurrency exchanges in South Korea, such as Coinone, Korbit, and Gopax, listed nine, four, and four tokens in June, respectively.

Exchanges Modify Terms of Service, Launch Educational Videos, and Insurance Companies Introduce New Products

After the implementation of South Korea's "Virtual Asset User Protection Act" on July 19, improper trading behaviors in the virtual asset market will be prohibited, and virtual asset exchanges will monitor abnormal trading. Significant changes are expected in the systems and regulations surrounding virtual assets. To this end, several exchanges are making intensive compliance preparations to create an environment that protects consumers.

Upbit is reviewing projects suspected of unfair trading through its "Unfair Trading Monitoring System" and has systematized the procedures for reporting to financial authorities. Additionally, the company recently produced and uploaded video content related to the U.S. Securities and Exchange Commission's approval of Bitcoin and Ethereum spot ETFs. This includes a segment about Ethereum ETFs, explaining the history, types, market conditions, and prospects of Ethereum ETFs in a simple and understandable manner. These videos can be viewed on Upbit's Investor Protection Center YouTube channel.

Upbit Investor Protection Center's YouTube channel

Upbit has collaborated with the Financial Supervisory Service (FSS) and the Digital Asset Exchange Association (DAXA) to raise investor awareness of investment fraud and prevention methods through the Upbit customer center website, as well as its YouTube and Instagram channels.

Regarding Bithumb, the company has strengthened its market monitoring capabilities by hiring professionals and is committed to protecting user deposits. On July 10, according to an official announcement, Bithumb modified its terms of use to comply with the Korean Virtual Asset User Protection Act, mainly refining concepts such as virtual assets, profits, and abnormal trading, and removing the "content service" item. The modifications align with actual service types and incorporate laws and regulations as the basis for service usage rights. New deposit-related regulations will be established following the implementation of the "Virtual Asset User Protection Act." Additionally, Bithumb has set up a reward for reporting improper trading behaviors, with a maximum of 300 million KRW, payable when the reported behavior is confirmed by disciplinary action or court ruling (for the first report).

Meanwhile, Korbit has enhanced the separation of inherent virtual assets and users' virtual assets for safekeeping, managing cold wallets (wallets that store virtual assets offline) with offline signatures by relevant Korbit staff.

Gopax provides comprehensive information on investments, from basic terminology to investigative reports. Coinone also centralizes all services within the Coinone wallet, enhancing monitoring of abnormal trading withdrawals.

The South Korean insurance industry is also working to launch virtual asset insurance products, with reports indicating that Korea Reinsurance and five to six property insurance companies are developing related products. It is reported that the insurance industry has been developing insurance for virtual asset operators since February, with a development period of about five months. After the law is implemented, virtual asset operators must mandatorily select insurance or reserves to cover responsibilities and compensations in case of incidents such as hacking or computer accidents. Currently, cryptocurrency companies have prepared reserve funds, and related insurance products are set to be launched soon.