In preparation for the upcoming enforcement of the Virtual Asset User Protection Act in the coming month, the Financial Supervisory Service (FSS) has declared a thorough examination of 600 local virtual assets. This declaration has triggered a significant wave of panic selling among investors, resulting in a sharp drop in the prices of various altcoins, particularly those known as ‘Kimchi Coins.’
As reported locally, the FSS disclosed that starting next month, it will carry out regular assessments of virtual assets listed on domestic exchanges. The primary objective of this process is to ensure that all listed coins adhere to strict criteria for listing maintenance. The imminent assessments have instilled widespread fear among investors, leading to an excess of selling.
On the 18th, the virtual asset sector disclosed that 16 altcoins were flagged as being at risk of delisting. This speculation, largely propagated through social media and coin communities, caused price decreases of 10-20% for roughly half of the coins listed on the KRW market.
Assessment Criteria and Investor Apprehensions
The FSS’s assessment criteria are divided into formal and qualitative prerequisites. Formal prerequisites encompass the credibility of the issuing entity, measures for user protection, technological security, and adherence to legal requirements. Qualitative prerequisites concentrate on the total volume of issuance, distribution strategies, and any alterations to the business plan.
Despite the concerns of investors, the FSS clarified its role in the assessment process. The Virtual Asset Supervisory Bureau of the Financial Supervisory Service stated, “The relevant information was supplementary material submitted to the National Assembly during the enactment of the Virtual Asset Act,” emphasizing that the FSS does not directly evaluate virtual asset transactions.
The virtual asset exchange attributed the recent price drops to investors’ exaggerated reactions. An official from Korea’s Korean Won Exchange mentioned that the assessment of transaction maintenance was a continuation of existing procedures, not an abrupt change. “The best practices for transaction support can be viewed as consolidating the assessment criteria that each exchange has already implemented into a broader framework,” the official elaborated, playing down the probability of widespread delistings.
Furthermore, the exchange addressed the circulation of baseless rumors regarding potential delistings. Officials pointed out that such lists have circulated before, often targeting ‘Kimchi Coins’ due to their substantial domestic trading volume.