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Crypto Listing: South Korean Regulators Plan Mandatory Approval For Exchange

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Financial regulators in South Korea are reviewing a plan on whether it should be mandatory for companies to get direct permission from authorities before listing their crypto-currencies on domestic digital asset exchanges, local media reported on December 12th.

There have been opinions that the financial authorities should look into both the listing and delisting of coins on local exchanges following the recent delisting of the crypto-currency Wemix, which was formerly referred to as the “representative kimchi coin” in Korea.

In accordance with the recent reports, the Seoul Central District Court issued a judgment on December 7th supporting the Digital Asset eXchange Alliance’s (DAXA) choice to delist WEMIX from leading South Korean crypto exchanges.

The Digital Asset Exchange Joint Consultative Body (DAXA), a group of cryptocurrency exchanges that includes South Korea’s most prominent companies, including Upbit, Bithumb, Coinone, Korbit, and Gopax, said that Wemade had failed to disclose the volume of tokens in circulation in a legitimate manner.

Nevertheless, this new plan’s opinions arose among the financial authorities, including the Financial Services Commission (FSC) and the Financial Intelligence Unit (FIU). 

It was proposed that the FSC should approve coin listings on crypto exchanges. “However, opinions are divided internally, so it seems that it remains to be seen whether it will be realized.” 

According to the report:

It is argued that the risk burden is too great for companies to voluntarily entrust the listing of coins on domestic exchanges, such as obtaining approval from the Financial Services Commission in accordance with the Capital Markets Act when raising securities for listing.

DAXA Action Mounts Concerns For Crypto Listing 

The Capital Markets Act requires that all public offerings or sales of securities be accompanied by a report to the FSC for approval. If the FSC determines that the publicly submitted statement has any formal mistakes, it can require the company to submit another corrective document stating the reasons.

However, the listing of coins on each exchange’s listing committee is entrusted to them for virtual assets, but the DAXA also takes action on its own when a currency is delisted. Following Daksa’s recent decision to delist Wemix, opinions are mounting that FSC should take immediate action to “prevent such a situation.”

There are now seven virtual asset-related measures pending in the National Assembly, and the financial authorities are debating putting a provision resembling the Capital Markets Act in one of them.

Nevertheless, there is also strong opposition to the coin’s listing proposal. The reason is that the financial authorities may feel burdened, and there is a strong chance that the market would object to any regulation plan that significantly alters the exchange listing.

According to a representative of the financial authorities:

Internally, the position that the financial authorities should be involved in both listing and delisting of coins and the opinion that ‘let’s go slowly’ after passing only the basic bill are compatible.

Related Reading | FTX Former CEO To Testify Before U.S. House Committee – Ready For Dec 13th?

Wemade’s WEMIX Token To Be Delisted After Court Rejects Injunction

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WEMIX, the native token of South Korean video game developer, Wemade was delisted by the nation’s four crypto exchanges on the grounds of inaccurate reporting of circulation data.

Bithumb, Upbeat, Coinone, Korbit, and Gopax — which are part of the Digital Asset Exchange Alliance [DAXA] announced on Nov. 24 that they would end the support for WEMIX on Dec. 8.

A few months prior, the group issued an investment warning that there was considerably more WEMIX in circulation than disclosed, and Wemade had agreed to work with DAXA to alleviate these concerns.

However, the situation worsened when Wemade CEO Henry Chang, speaking at an online press conference on November 25, criticized Upbit for misusing its authority by delisting WEMIX and threatened to report the exchanges to the Fair Trade Commission.

The online game publisher refused to back down and ultimately filed an injunction request in a bid to prevent other exchanges from delisting its token.

As reported by Money Today News, South Korea’s Seoul Central District Court has now dismissed the firm’s suggestion after the hearing on Dec. 2.

This implies that the four exchanges will remove the token from their platform at 3 p.m. on 8th Dec.

WEMIX Token Drop By 50%

As word of the delisting decision spread, WEMIX Communication issued a statement stating it had sincerely followed DAXA’s requests and concerns and fixed a number of problems where they felt the group’s circulating supply had been overestimated, adding:

“The team does not acknowledge or agree with the unreasonable decision made by the Digital Asset eXchange Alliance (DAXA)… It is crucial to note that the Foundation has not circulated a single WEMIX more than what we have officially disclosed thus far.”

The price of WEMIX plummeted following the news, and at the time of writing is down by over 47% with a current price of $0.35.

Meanwhile, Binance has come to the gaming firm’s aid as its legal issues have gotten worse. Wemade’s token will be kept under institutional custody by Binance Custody, the largest cryptocurrency exchange in the world.

It will manage the asset and verify its circulation volume from next week, as per Wemade Co. Ltd. Moreover, 70% of WEMIX’s total supply, which contributes to 92% of the cryptocurrency that is not in circulation, will be overseen by Binance Custody.