South Korea’s 20 crypto exchanges, along with their representative body, have created a new code of conduct for local cryptocurrency firms. This move will reevaluate over 1,300 cryptocurrencies currently traded on domestic platforms.

The new self-regulatory standards, announced by the Digital Asset Exchange Association (DAXA), will be implemented on July 19. This date also marks the beginning of South Korea’s first regulatory framework focused on protecting crypto investors.

“If a new cryptocurrency is to be listed in the future, the exchange must examine the token on both formal and qualitative requirements,” the DAXA press release stated.

The industry alliance will impose the rules on its member companies.

Token evaluation criteria

The formal requirements include standards on issuers’ credibility, investor protection measures, security, and compliance. Tokens that do not meet any of these criteria will not be listed for trading.

The qualitative requirements involve a comprehensive review of the project based on various factors. The schedule plans for reviews to occur quarterly.

The new standards also require local exchanges to establish an independent decision-making body for token listings. Every major listing and delisting decision must adhere to the new rules.

The release states that companies must document and preserve the decision-making process for token listings for 15 years to ensure fairness and transparency.

Reevaluating existing tokens

Local exchanges will reexamine existing crypto tokens within a six-month grace period. By the end of 2023, South Korea traded 1,333 crypto tokens.

DAXA noted that mass delistings of altcoins are unlikely because major exchanges in South Korea have already been following the rules.

South Korea hosts one of the world’s largest cryptocurrency markets, known for its heavy altcoin presence. According to Kaiko data, in the first quarter of 2024, the South Korean won was the most-used fiat currency for trading crypto.

As reported by The Block, Upbit, the country’s largest exchange, processed over $30 billion worth of crypto transactions in June.

New crypto law

The country’s new crypto law, the Virtual Asset User Protection Act, aims to stop illicit market activities. These include using undisclosed information for crypto investments, manipulating market prices, and engaging in fraudulent transactions.

The law also requires crypto service providers to protect over 80% of deposits in cold storage and enroll in insurance programs to compensate users in the event of security breaches.

Also read: New Tax Rules for Crypto Brokers