South Korea enforces stricter regulations for cryptocurrency exchange listings.

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South Korea is introducing stricter regulations for cryptocurrency exchange listings, with new guidelines expected to be released by the end of April or early May. These guidelines will prohibit the listing of digital assets on domestic exchanges if they have been involved in hacking incidents, unless the root cause is thoroughly investigated. Additionally, foreign digital assets will only be permitted for listing if a white paper or technical manual is made available for the South Korean market.

However, tokens that have already been listed on a licensed exchange for over two years may be exempt from these new criteria. The directives may also require exchanges to remove cryptocurrencies from their listings if issuers fail to disclose essential information, such as discrepancies in circulation amounts.

The South Korean government is currently seeking feedback from local exchanges on these proposed regulations. The Financial Supervisory Service has been collaborating with stakeholders, including the Digital Asset Exchange Association, to formulate these guidelines since late 2023.

The Financial Services Commission, a government agency responsible for overseeing financial institutions and markets in South Korea, issued an update to the Virtual Asset Users Protection Act in early February. This legislation includes severe criminal penalties and fines for violations, reflecting the aftermath of the industry crisis involving Terraform Labs and its founder, Do Kwon, a South Korean citizen.

Following Terra’s collapse in May 2022, resulting in significant losses, the Gyeonggi Provincial Tax Justice Department implemented a digital tracking system targeting crypto accounts of tax evaders, leading to the collection of 6.2 billion won ($4.6 million) in non-declared taxes in 2023.

Furthermore, the Financial Intelligence Unit of South Korea reported a 49% increase in suspicious transactions flagged by domestic digital asset exchanges in 2023 compared to 2022. The FIU outlined its 2024 work plan on Feb. 14, emphasizing critical data and strategic initiatives for regulating the crypto market.

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