South Korea’s Financial Supervisory Service Clarifies Role in Crypto Regulation

Recently, South Korea’s Financial Supervisory Service (FSS) has come under scrutiny for its alleged involvement in the removal of digital assets from local cryptocurrency exchanges. Reports emerged claiming that the FSS had instructed exchanges like Upbit, Bithumb, and Gopax to evaluate various tokens on their platforms. This move was said to be in line with the Virtual Asset User Protection Act, which imposes strict compliance measures on exchanges and mandates regular assessments of listed tokens.

Under the new law, crypto exchanges are required to adhere to stringent guidelines for token listings and conduct biannual assessments of existing tokens. They must evaluate factors such as the reliability of the issuing entity, user protection measures, technology, security standards, and regulatory compliance of the digital assets. Non-compliance with these regulations can result in severe penalties, including jail terms and hefty fines.

In response to the rumors surrounding the delisting of up to 600 altcoins, the FSS has denied direct involvement in the listing or delisting of virtual assets on exchanges. The regulator clarified that its role is limited to establishing listing standards and not overseeing the actual review process. According to the FSS, financial authorities inspect virtual asset operators but do not directly review stocks. The announcements regarding delistings will be made by the exchanges themselves and the Digital Asset Exchange Association (DAXA).

There are also reports suggesting that the FSS is considering the establishment of a new division dedicated to crypto regulation. This division would be tasked with developing policies, overseeing regulatory compliance, and creating a framework for the rapidly evolving crypto sector in South Korea.

While the FSS may play a crucial role in setting listing standards and ensuring compliance with regulations, it is important for the public to understand that the authority does not directly dictate which digital assets are listed or delisted on exchanges. The introduction of stricter guidelines and the potential creation of a dedicated crypto regulation division highlight South Korea’s commitment to fostering a safe and transparent environment for cryptocurrency trading.