As South Korea's Virtual Asset User Protection Act prepares to take effect on July 19, major cryptocurrency exchanges like Upbit and Bithumb are accelerating their token listing processes. The impending legislation introduces stricter requirements for new token listings and enhanced scrutiny of existing tokens, prompting exchanges to clear their backlog of approved assets before the deadline.
Market data reveals a significant surge in listing activity throughout 2024. Upbit's listing rate peaked in May, while Bithumb recorded its highest activity in January before reaching another peak in June. Other prominent exchanges—Coinone, Korbit, and Gopax—collectively added 17 new tokens in June alone.
Beyond listing activity, exchanges are undertaking comprehensive compliance measures. Insurance providers are also developing new products tailored to the requirements of the new regulatory framework.
Exchange Listing Window Before Stricter Regulations
On July 11, Upbit announced the listing of Galxe (GAL), resulting in a 15% price increase within 24 hours. Just two days earlier, the exchange added an ENS/KRW trading pair, which saw ENS surge over 18%. That same day, Bithumb, South Korea's second-largest exchange, announced new trading pairs for BRETT and TAIKO.
While these appear to be routine listing announcements, industry observers identify a clear pattern. Many interpret this flurry of activity as a strategic "window of opportunity" for exchanges to list tokens ahead of the more stringent regulatory environment.
Previously, rumors suggested that the new law might lead to mass delistings. However, regulatory authorities have clarified that they will not directly participate in token reviews. Analysts suggest that the new regulations aim to foster a more fair and transparent virtual asset market, prevent speculative trading from benefiting specific interests, and ultimately create a more active trading ecosystem.
Faced with these stricter expectations, expediting the approval of pending tokens has become a top priority for South Korea's major exchanges.
Upbit, traditionally conservative in its listing approach, added four new tokens in June alone and three more within the first two weeks of July. By July 10, 2024, Upbit had listed a total of 20 new tokens for the year. Its listing pace slowed in March and April but reached a peak of six tokens in May.
Bithumb listed 12 tokens in January, slowed its pace, but then significantly accelerated approvals in May and June with six and seven listings, respectively.
A notable burst of activity occurred between May 28 and May 31, when Upbit and Bithumb collectively listed five tokens—$ENS, $AR, $AUCTION, $STG, and $BEAMX—in a concentrated four-day period.
Other major exchanges also joined the trend. Coinone, Korbit, and Gopax listed 9, 4, and 4 tokens, respectively, throughout June.
Compliance Preparations: Updated Terms, Education, and New Insurance Products
After the Virtual Asset User Protection Act takes effect on July 19, unfair trading practices within the virtual asset market will be prohibited. Exchanges will be required to monitor for anomalous transactions, prompting significant operational and systemic changes across the industry.
Exchanges are actively preparing for these new requirements, focusing on creating a more secure environment for consumers.
Upbit has systematized its procedures for reviewing projects suspected of unfair trading through an "unfair trading monitoring system" and for reporting to financial authorities. The exchange has also produced educational content, including videos explaining the history, types, market status, and outlook of Bitcoin and Ethereum spot ETFs approved by the U.S. SEC. This content is available on the Upbit Investor Protection Center's YouTube channel.
Furthermore, Upbit is collaborating with South Korea's Financial Supervisory Service (FSS) and the Digital Asset Exchange Association (DAXA) to raise investor awareness about fraud prevention through its customer center website, YouTube, and Instagram.
Bithumb has strengthened its market monitoring capabilities by hiring specialized professionals and enhancing user deposit protection. On July 10, the exchange announced updates to its terms of service to comply with the new law. These updates include refining definitions for virtual assets, profits, and abnormal transactions, removing the "content service" category, and adding new regulations governing user deposits. Bithumb has also instituted a reward program, offering up to 300 million won for reporting unfair trading practices.
Korbit has enhanced security by implementing stricter separation between its corporate assets and user assets using dedicated wallets. The management of cold wallets—which store assets offline—now requires offline signatures from authorized employees.
Gopax now provides comprehensive educational resources, covering basic terminology and investment reports. Coinone has centralized all services within its proprietary wallet and strengthened monitoring for abnormal withdrawal activity.
The insurance industry is also responding. Korean Re and five to six general insurance companies are reportedly developing new insurance products tailored for virtual asset operators. This development process, which began in February, spans approximately five months. After the law takes effect, virtual asset service providers will be obligated to secure insurance or maintain reserves to cover liabilities and compensations arising from incidents like hacks or computer failures. While many crypto firms have already established reserve funds, these new insurance products will provide an additional compliance option.
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Frequently Asked Questions
What is the South Korean Virtual Asset User Protection Act?
This is a new law set to take effect on July 19, 2024. It establishes a regulatory framework for virtual assets, prohibiting unfair trading practices and mandating that exchanges implement monitoring systems and user protection measures to create a more transparent market.
Why are exchanges listing so many tokens now?
Exchanges are accelerating their token approval processes to list assets before the new, stricter regulations come into force. This has created a temporary "window of opportunity" for listings under the current, less rigorous rules.
How will the new law protect users?
The law enhances user protection by requiring exchanges to monitor for and prevent unfair trading, clearly define terms of service, secure user assets, and either maintain reserves or obtain insurance to cover potential losses from security incidents.
What changes are exchanges making to comply?
Exchanges are updating terms of service, enhancing market surveillance systems, improving cold wallet security protocols, separating corporate and user assets, and launching extensive investor education initiatives.
Will tokens be delisted after the law takes effect?
While there were initial rumors of mass delistings, regulators have clarified they won't directly oversee token reviews. However, exchanges will likely conduct stricter ongoing reviews, which could lead to some delistings if tokens fail to meet new standards.
Are there new insurance options for crypto investors?
Yes. The law mandates that exchanges must have insurance or reserves to cover liabilities. In response, the insurance industry is developing new products specifically designed for virtual asset operators to help them meet this requirement.