Sharp Decline of Altcoins Due to New South Korean Law Panic Selling of Kimchi Coin Leads to Market Crash South Korean Financial Supervisory Service Denies
Table of Contents
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Unsubstantiated Delisting Rumors Spark Panic
Quarterly Reviews and Investor Panic
Impact on Competing Coin Prices
Listing Inspection Standards Explanation
Financial Supervisory Commission Clarifies its Role
Overreaction to New Legislation
Financial Supervisory Commission Urges Caution in Investment
With the expected enforcement of the “Virtual Asset User Protection Act” (Virtual Asset Act) in the next month, the cryptocurrency market in Korea has experienced significant turmoil. Due to rumors that several competing coins may be delisted, the prices of many digital assets have dropped sharply.
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Korea is expected to establish a “Virtual Asset Department” at the end of June to protect user assets, and public officials are not allowed to hold virtual assets.
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Starting next month, financial authorities plan to conduct quarterly reviews of 600 domestic digital assets. Coins that do not meet specific standards may face trading suspensions, leading to widespread panic selling among investors.
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In fact, the Hong Kong Securities and Futures Commission also has similar listing inspections for digital assets. However, as Korea is currently a key market for cryptocurrencies, it is expected to have a more widespread impact.
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Don’t lose to Korea! Korea Financial Commission: Cryptocurrency users reach 6.45 million, 70% invest less than $800
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Hong Kong Cryptocurrency Regulation Effective 6/1: Exchanges have a heavy responsibility to protect retail investors and cannot trade stablecoins temporarily
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According to reports from Korean media, rumors spread on the internet about 16 competing coins that could be delisted in June. These speculations led to a 10-20% drop in the prices of about half of the coins listed on Upbit.
Listing inspections are divided into formal and quality checks.
Formal inspections focus on the reliability of the issuing entity, user protection mechanisms, technical security, and legal compliance. Quality checks consider the total circulation and distribution plan, as well as changes in business plans.
The Virtual Asset Supervision Bureau of the Financial Supervisory Service clarified that financial authorities do not directly participate in the inspection of virtual asset trading. The Bureau had submitted relevant details to the parliament when the Virtual Asset Act was being formulated. The Financial Supervisory Service supports the establishment of unified listing standards for exchanges but does not directly inspect individual assets.
Cryptocurrency exchanges attribute the market crash to investors’ overreaction before the law is implemented. An exchange operator mentioned that the new standards do not differ significantly from the previous ones, indicating that the likelihood of widespread delisting is low.
Recent rumors of delisting lists are not unprecedented. Such rumors often revolve around high-volume “kimchi coins” and have occurred frequently in the past, but are usually unfounded.
The Financial Supervisory Commission urges investors to act cautiously, pointing out that many alternative coin investors lack a sufficient understanding of their investments. A Financial Supervisory Commission official emphasized the principle of investment responsibility and warned investors to be aware of risks.
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