South Korea’s Financial Supervisory Service (FSS) has clarified its involvement amid rumors of mass delisting of digital assets from local crypto exchanges.

On June 17, reports surfaced that the FSS had directed registered crypto exchanges, including Upbit, Bithumb, and Gopax, to evaluate several tokens listed on their platforms. This directive aligns with the Virtual Asset User Protection Act, which mandates stringent compliance and regular assessments of listed tokens.

Under the new law, exchanges must adhere to stricter guidelines for token listings and reassess existing tokens biannually. They are required to evaluate the reliability of the issuing entity, user protection measures, technology, security standards, and regulatory compliance of these digital assets.

The legislation also imposes severe penalties for non-compliance, including a minimum one-year jail term or fines ranging from three to five times the illegal profits generated from the venture. Consequently, there are concerns that up to 600 altcoins may face delisting during these reviews, triggering panic selling among investors.

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In response to these rumors, the FSS denied direct involvement in listing or delisting virtual assets on exchanges. The regulator emphasized that its role is limited to establishing listing standards, not overseeing the review process. The FSS stated:

“Financial authorities inspect virtual asset operators and do not directly review tokens. We participated initially to support the creation of best practices, but the announcements will be made by the exchange and DAXA.”

Additionally, there are reports that the FSS plans to create a new division dedicated to crypto regulation. This division would be responsible for policy development, regulatory oversight, and establishing a framework for the growing sector.

Source: cryptoslate.com

The post Financial watchdog clarifies role amid South Korea’s new crypto compliance crackdown appeared first on HIPTHER Alerts.

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