South Korea's "Virtual Asset User Protection Act" is about to take effect: Cryptocurrency exchanges are entering a "window period" for listing coins

Author: Weilin, PANews

As South Korea's Virtual Asset User Protection Act is about to take effect on July 19, major Korean cryptocurrency exchanges, represented by Upbit and Bithumb, have accelerated their coin listings before this time point. The increasingly stringent token listings brought about by the new law and the expectation of review of existing tokens have caused these exchanges to speed up the progress of token review.

According to public market information, PANews has counted the listings of Upbit and Bithumb, two major Korean exchanges, as of July 11, 2024. The trend of Upbit's listings showed a peak shape, reaching a peak in May, which was obviously affected by the new regulation. On the other hand, Bithumb listed the most coins in January, then fell silent, but reached a new peak in the number of listed coins in June. The other three exchanges, Coinone, Korbit, and Gopax, also concentrated on listing coins in June, with a total of 17 coins listed.

In addition, according to reports from multiple Korean media outlets, several major exchanges have made further preparations for compliance, and insurance companies are about to launch new virtual asset insurance products in response to the new law.

Under the pressure of the new law, exchanges have a "window period" for listing coins

On July 11, Upbit announced the launch of Galxe (GAL), driving the token’s 24-hour increase by 15%. Two days ago, on July 9, Upbit announced the launch of ENS Korean won trading pairs, and ENS rose by more than 18% in a short period of time. On the same day, Bithumb, the second largest cryptocurrency exchange in South Korea by trading volume, announced the addition of BRETT and TAIKO trading pairs in the Korean won market.

Although this is just a seemingly routine coin listing dynamic, some industry insiders sensed a new signal, saying that "it looks like there was a small window period for the two major exchanges to list coins before the Korean crypto asset protection law came into effect."

PANews previously reported that before the new law came into effect in South Korea, there were rumors that tokens would be delisted on a large scale, but the regulator clarified that it would not directly participate in the token review. Some analysts said that the new regulation may make virtual asset transactions more fair and transparent, prevent speculative transactions from leading to the monopoly of interests by specific forces, and make the virtual asset trading field more active.

Faced with stricter regulatory expectations, quickly approving the backlog of tokens waiting to be listed has become a top priority for several major exchanges in South Korea.

Upbit, the leader in the exchange industry, has always been conservative about listing new coins in the past, but it has launched 4 new coins in the last month alone, and 3 tokens have been launched just two weeks into July. According to statistics, Upbit has launched a total of 20 tokens as of July 10, 2024. In terms of the trend of the number of listed coins, Upbit's listings slowed down in March and April, reaching a peak in May, with a total of 6 coins listed in May.

Bithumb, the second largest cryptocurrency exchange in South Korea by trading volume, listed 12 coins in January, but then slowed down. However, in May and June, Bithumb significantly accelerated the pace of listing coins, listing 6 coins in May and 7 coins in June.

It is worth mentioning that in just 4 days from May 28 to May 31, Upbit and Bithumb, two exchanges, launched a total of 5 tokens, namely, $ENS, $AR, $AUCTION, $STG, and $BEAMX, with rapid and intensive actions.

In addition to these two exchanges, other major cryptocurrency exchanges in South Korea, Coinone, Korbit, and Gopax, listed 9, 4, and 4 coins respectively in June.

Exchanges revise terms of service, launch educational videos, and insurance companies launch new products

After the implementation of the Korean Virtual Asset User Protection Act on July 19, improper trading in the virtual asset market will be prohibited, virtual asset exchanges will monitor abnormal transactions, and it is expected that there will be many changes in the system and system surrounding virtual assets. To this end, judging from the movements of several exchanges, they are all making intensive compliance preparations for the new law to create an environment to protect consumers.

Upbit is reviewing projects suspected of unfair trading through the "Unfair Trading Monitoring System" and has systematized the procedures for reporting to financial authorities. In addition, the company recently produced and uploaded video content related to the SEC's approval of Bitcoin and Ethereum spot ETFs. This includes a video about Ethereum ETFs, which explains the history, types, market conditions and prospects of Ethereum ETFs in an easy-to-understand way. These videos can be viewed on the Upbit Investor Protection Center's YouTube channel.

Upbit Investor Protection Center's YouTube Channel

Upbit has partnered with South Korea’s Financial Supervisory Service (FSS) and the Digital Asset Exchange Association (DAXA) to raise awareness of investment fraud and prevention methods through the Upbit Customer Center website, as well as its YouTube and Instagram accounts.

As for Bithumb, the company has strengthened its market monitoring function by hiring professional talents, while working to protect user deposits. On July 10, according to the official announcement, Bithumb revised its terms of use to comply with the Korean Virtual Asset User Protection Act, mainly including refining the concepts of virtual assets, profits, abnormal transactions, etc., and deleting the "content service" item. Modify the service type in accordance with the actual situation, and add laws and regulations as the basis for the right to use the service. Formulate new deposit-related regulations based on the implementation of the "Virtual Asset User Protection Act", etc. In addition, Bithumb has also established a reward of up to 300 million won for reporting improper trading behavior, and the payment will be established when the relevant behavior is subject to disciplinary sanctions or the court confirms that the report is true (first report).

At the same time, Korbit has strengthened the separation of its own virtual assets and users' virtual assets in wallets. When managing cold wallets (wallets that store virtual assets separately from the network), employees of relevant departments of Korbit will manage them by offline signature.

Gopax provides everything from basic terminology to investigation reports to help people understand the overall information of the investment. Coinone also allows all services to be performed within the Coinone wallet to strengthen monitoring of abnormal transaction withdrawals.

The Korean insurance industry is also working on launching virtual asset insurance products. It is reported that Korea Reinsurance and 5 to 6 property insurance companies are developing related products. It is reported that the insurance industry has been developing virtual asset operator insurance since February, and the development time is about 5 months. After the implementation of the law, virtual asset practitioners must choose insurance or reserves in order to be responsible for and compensate for the accident if hacking, computer accidents, etc. occur. At present, crypto companies have prepared savings reserves, and related insurance products are about to be launched.