Ahead of the implementation of the Virtual Asset User Protection Act next month, the Financial Supervisory Service (FSS) has announced a comprehensive review of 600 domestic virtual assets. This announcement has led to significant panic selling among investors, causing a sharp decline in the prices of numerous altcoins, particularly those labeled as ‘Kimchi Coins.’
According to the local report, the FSS revealed that starting next month, it would conduct quarterly reviews of virtual assets listed on domestic exchanges. This process aims to ensure that all listed coins meet stringent standards for listing maintenance. The impending reviews have triggered widespread fear among investors, leading to excessive selling.
On the 18th, the virtual asset industry reported that 16 altcoins were identified as at risk of being delisted. This speculation, primarily spread through social media and coin communities, resulted in price drops of 10-20% for about half of the coins listed on the KRW market.
Review Standards and Investor Concerns
The FSS’s review standards are categorized into formal and qualitative requirements. Formal requirements include the reliability of the issuing entity, user protection measures, technology security, and legal compliance. Qualitative requirements focus on the total issuance volume, distribution plan, and any changes to the business plan.
Despite the investor anxiety, the FSS clarified its role in the review process. The Financial Supervisory Service’s Virtual Asset Supervisory Bureau stated, “The relevant information was ancillary material submitted to the National Assembly when the National Assembly enacted the Virtual Asset Act earlier,” emphasizing that the FSS does not directly review virtual asset transactions.
The virtual asset exchange attributed the recent price declines to investor overreaction. An official from Korea’s Korean Won Exchange indicated that the transaction maintenance review was a continuation of existing practices, not a sudden change. “Best practices for transaction support can be seen as integrating the review standards that each exchange has implemented so far into one in a larger framework,” the official explained, downplaying the likelihood of mass delistings.
Additionally, the exchange addressed the spread of unfounded rumors about potential delistings. Officials noted that such lists have circulated in the past, often targeting ‘Kimchi Coins’ due to their high domestic trading volume.
