South Korean crypto exchanges banned from handling their own coins
Exchange tokens are tokens issued by a particular cryptocurrency exchange that usually offer exclusive benefits to the user such as reduced trading fees and regular token burns.
Cryptocurrency exchanges are being prohibited from handling any coins or assets issued by themselves. The law also extends to any assets issued by family members, spouses, or distant relatives, and is expected to come into effect on June 26, according to a report by Arirang.
The regulations emphasized that if the exchange fails to comply, it will get its operations suspended and face fines of up to $88,000.
Recently, the country’s Financial Intelligence Unit (FIU) contacted around 33 cryptocurrency trading platforms to inform them of an upcoming field consultation due no later than Sept. 24.
In recent weeks, Upbit exchange delisted a handful of coins, and issued strident investment warnings to another 25 assets, representing 14% of all coins listed on the exchange. The exchange is no longer even accepting inbound deposits for the 25 coins mentioned in the warning and has said it will further review the assets to decide whether or not to delist them completely. The deadline for its final decision on the tokens is Friday, June 18.
South Korea’s move to tighten its grip on the cryptocurrency industry within its borders has seen regulators demand Information Security Management System certificates from crypto trading platforms, essentially acting as a license to operate. Of 20 exchanges with the certificate, 11 have already either delisted tokens or issued warnings similar to Upbit’s.
Given that many exchange tokens don’t operate on a proprietary blockchain, the legal definition of what it means to “handle” tokens issued by exchange may be stretched in the coming days and weeks, as South Korea’s coin clean-up continues.