Regulatory Transparency the Core Issue as Crypto Investors Suffer

Korean cryptocurrency investors and builders alike have erupted in disappointment following a sudden series of token delistings from major exchanges such as Upbit and Bithumb. It turns out that the Financial Supervisory Service (FSS) has insisted that exchanges establish a Coin Killing Department dedicated to reducing trading pairs. Affected parties now decry the lack of transparency in the decision-making process leading up to current events.

On the 4th, the Financial Services Commission (FSC) met with representatives from 20 local Korean exchanges that had obtained the ISMS Certification now required to operate an exchange in the country. While the meeting minutes from the closed meeting have not been revealed, many believe that the FSC and, by extension, any concerned organ of the government, would be as harsh as possible on exchanges.

In addition to the tacit warning issued by the FSC, which the small and mid-size exchanges certainly felt most, according to Doo Wan Nam, extra guidelines have been issued by Korean banks to evaluate the creditworthiness of a cryptocurrency seeking listing on a Korean exchange. To the dismay of some, the guidelines apply to currently-listed coins, as well.

Only revealed today, according to Decenter, the FSS requested all exchanges deliver lists of current trading pairs, coins seeking listing, and trading pairs slated for termination. The request likely caused altcoin investors’ pain on Korean trading platforms.

June 2021 Exchange Listing Shakeup

Upbit announced that some 15 projects would be slated for delisting unless their trading volume increased or they completed some laundry list of tasks under the exchange’s guidance. The recommended tasks essentially added up to busy work for some projects as even successful completion resulted in a delisting warning.

In the case of Quiztok, one of the projects slated for delisting, Upbit contacted them in private to the project to offer guidance on how to remain on the exchange. Upon receiving guidance from Upbit and subsequently submitting the documents requested by the exchange, they still received word that the exchange would cut their trading pair. TheNews.Asia obtained the correspondences with Upbit including the submitted documents.

In a twist of fate fitting only for the Korean cryptocurrency market, and quite possibly one of the many reasons regulators have cracked down on exchanges, all 15 of the trading pairs slated for delisting pumped at least 30% today and topped the lists of top-gainers on trading platforms.

Disgruntled Traders

Delistings at local exchanges have riled up the trading masses so much that they sent a petition to the Blue House, the home of the president of the country. Among those leading the push for legal action were representatives from Quiztok, one of the coins that began pumping shortly after the delisting warnings were issued last Thursday.

A harsh statement issued by Quiztok says that Upbit shared the delisting warnings “[without any justifiable reason, which has caused enormous damage to Quiztok and its investors.]”

A local cryptocurrency influencer said that Upbit should communicate better with investors about their internal operations regarding delistings. As it currently stands, no exchange has issued clear reasoning for why they chose the coins they chose.

Individual investors sent the petition to the Blue House to await signatures. If the petition obtains at least 150,000 signatures, the country’s head executive will have to see to the matter. As of now, Blockmedia reports that the petition has 2568 signees.

The events leading up to the present day’s announcement about the Coin Killing Department from the FSS add some much-needed context to the exchange delistings, but not without unnecessary pain caused to players in the market due to the lack of transparency from all sides.

Coin Killing Department

While investors may be justified in their anger against Upbit and other major exchanges for a complete lack of institutional transparency, the FSS may carry some blame, as well. Today the FSS announced that they wanted all exchanges to open internal Coin Killing Departments dedicated to removing poor-quality trading pairs.

The implementation of the Special Reporting Act precedes the current regulatory action – that is to say that few should be surprised by the amount of attention the cryptocurrency industry is getting from regulators these days. They likely want to ensure a successful roll out of the laws stated within the amendment that passed a vote in March 2020 and came into effect with a 6-month grace period in March 2021. Full implementation of the Act will begin in October of this year.