As South Korea prepares to enforce the Virtual Asset User Protection Act on 19 July 2024, financial authorities are expected to release new “Virtual Currency Trading Guidelines.” This development has stirred significant anxiety among cryptocurrency investors, particularly concerning the potential delisting of altcoins.

According to a recent report by South Korea’s Business Point, the Financial Supervisory Service (FSS) is set to announce “Virtual Asset Trading Support Best Practices” to guide domestic exchanges in maintaining cryptocurrency trading support. Industry insiders indicate that these guidelines are intended to be implemented swiftly, potentially before the new act takes effect. The guidelines aim to enhance the reliability and credibility of the cryptocurrency market by setting standards for trading support and maintenance reviews.

A key concern among investors is that these guidelines might lead to a repeat of the mass delistings witnessed in 2021. During that period, Upbit, a leading South Korean exchange, temporarily terminated support for 24 types of virtual currencies due to issues such as insufficient technical capabilities, undisclosed distribution and market sales, global liquidity problems, and opaque information disclosure. This move caused significant price declines in the affected altcoins and triggered widespread market instability.


However, the overall reliability of the cryptocurrency market has improved since 2021. This, coupled with the burden large-scale delistings could place on exchanges, makes such an event less likely. Upbit has attempted to reassure investors by emphasizing its regular maintenance reviews and transparent evaluation criteria, dismissing rumors of imminent large-scale delistings as unfounded.

Despite these reassurances, the potential for sudden delistings based on the new guidelines remains. Exchanges could terminate trading support for cryptocurrencies with hacking problems or non-transparent circulation volumes. Such actions could negatively impact not only the delisted cryptocurrencies but also broader market sentiment, potentially leading to declines in other virtual currencies.

On the other hand, some industry officials believe the current level of concern is excessive. They argue that while the best practices might lead to the delisting of insolvent virtual currencies, the guidelines could ultimately strengthen market credibility. This sentiment is echoed by Kim Ji-won, a researcher at KB Securities, who suggests that the guidelines will serve as a form of self-regulation, complementing the Virtual Asset User Protection Act and fostering a self-purifying effect in the market.

Featured Image via Pixabay



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