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By Anna J. Park
Major cryptocurrency exchanges in Korea have been focusing on delisting some of their digital coins following the government's recent announcement that the Financial Services Commission (FSC) will take charge of cryptocurrency-related policies and management.
The move is seen as an attempt by the exchanges to distance themselves from risky virtual assets ahead of a mandatory registration process set to be in place by the end of September.
Out of 20 major local cryptocurrency exchanges which have already obtained Information Security Management System (ISMS) certification showing they have met rigorous requirements for safe operation ― 11 digital coin exchanges announced this month either specific timelines for delisting certain coins or transaction warnings for others. The exchanges said the designated coins did not pass their internal evaluation criteria.
Coinbit, one of the top three exchanges in Korea in terms of daily transactions following Upbit and Bithumb, announced at 10 p.m. Tuesday that it delisted eight digital coins and designated 28 other cryptocurrencies as requiring caution. Considering that there are 70 coins listed on the exchange's won-denominated market, more than half of the listed coins were either delisted or designated as requiring caution.
The eight coins are Lex, Io, Pantheon, UP token, Dex, Proto, Dexter and Next. The digital coins will be delisted from Coinbit at 8 p.m. on June 23. The other 28 coins deemed as requiring caution in trading will also be reassessed later this month to determine whether to keep them.
"The coins failed to meet internal criteria such as business communication, technological capability and global liquidity," Coinbit's notification statement read.
Most of the coins to be delisted from the exchange plunged around 80 percent in value compared to 24 hours before.
Upbit, the country's largest digital coin exchange, announced last Friday that it will cease to support the trading of five coins, including Maro, Paycoin and Observer, in its won-denominated market starting June 18. The exchange also designated another 25 digital assets as coins in need of particular caution in trading, because they failed to meet Upbit's internal requirements to protect investors.
"Orders requested will be canceled prior to the termination date. Upbit will always maintain a high level of transparency and sound trading environment," the exchange's announcement read.
However, in Upbit's case, the five coins will only be removed from won-denominated trading, but can still be traded in the bitcoin-denominated market. Still, the affected coins experienced huge falls in their prices following the announcement, sending shockwaves to other virtual assets as well.
Investors were rattled by the latest moves.
"I feel deeply betrayed. Because of the exchange's sudden announcement, Maro's price fell as much as 70 percent in a day. And it seems like the information must've been shared by some people before the announcement, because charts showed that the price started to plunge before the official announcement was made," a local coin investor told The Korea Times.
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What is more confusing to investors is that some of these coins set to be delisted or scheduled to stop being traded at certain exchanges are being traded normally at other exchanges, because there's no clear legal framework to regulate them.
An official from the country's major coin exchange explained that it is trying to take gradual steps to minimize the shock felt by investors.
"First, we are reassessing listed coins according to certain internal criteria on a regular basis to ensure maximum investor protection. If certain coins fail to meet the requirement, we designate them as coins in need of caution, while waiting for the issues to be corrected rather than delisting them from the market right away," the official explained over the phone.
Despite increased uncertainties involving some digital coins, bitcoin's price remains stable, trading at 46.52 million won ($41,630) on Upbit at 3:45 p.m., Wednesday, up 0.28 percent from 24 hours earlier. Ethereum traded at 2.92 million won, down 0.75 percent from the previous session.
