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The South Korean government recently passed a new Digital Assets Law and as a result of this law, exchanges will inspect 600 listed tokens. According to the companies, the measure aims to ensure that these tokens do not violate the rules introduced by the new law.

This announcement resulted in panic and a significant decline in altcoin prices. After all, the decision raised fears that the country’s exchanges could remove these tokens if they understand that they violate the law in some way.

At first it was thought that this review would take place by order of the South Korean government. However, country officials clarified that they are not directly involved in the review process.

The official schedule of the Virtual Assets User Protection Law (Virtual Assets Law) predicts that its implementation will take place in July. But before that, the prices of dozens of tokens plummeted due to unfounded rumors of altcoin-related “delisting.”

Virtual Assets Law Puts Tokens Under Investigation

The new law aims to provide a structured framework for virtual asset transactions and protect investors, but it has inadvertently raised fears among investors. Many panicked and sold tokens en masse after the review was announced.

The fear was greater due to the fact that this review will take place every three months, being a practice that is here to stay. Therefore, every quarter the market must speculate which cryptocurrencies and tokens will be removed.

These speculations have already caused the devaluation of several tokens just due to rumors. On Upbit alone, around half of the currencies traded against the Korean won suffered drops of between 10-20%.

The exchange said the inspection will evaluate whether coins meet listing standards for “best practices in transaction support,” with problematic cryptocurrencies facing potential delisting.

Review criteria encompass formal and qualitative requirements and include issuer credibility, user protection, technological security and regulatory compliance. Qualitative factors include the total supply of each token, distribution plans and any changes to the business plan.

Market reaction

The Financial Supervision Service clarified that the information submitted to the National Assembly when the law was approved. The National Assembly asked the Financial Supervision Service to help establish unified listing standards for the country’s exchanges.

Financial authorities supervise virtual asset operators but do not directly analyze tokens. They helped create best practices, but emphasized that any announcements will come from exchanges and the Digital Asset eXchange Alliance (DAXA).

After the backlash, exchanges made it clear that mass deletions are unlikely and denied the authenticity of any exclusion list circulating on the internet.

Finally, the Financial Supervision Service urged investors to be aware of the risks, as many altcoin investors do not have adequate information about their investments.

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