- The bill said digital assets trading on domestic virtual-asset exchanges would have to undergo a new review under updated standards within one year of the law taking effect.
- It said digital assets deemed likely to seriously undermine investor protection or market order would face priority review within six months of the law taking effect, and would move to trading-support termination procedures if they fail to meet the requirements.
- The bill said exchanges would be required to conduct regular eligibility reviews even after listing, while codifying delisting and user-protection procedures when assets fall short of the standards, and requiring a separate trading support review committee as well as the separation of review functions from business operations.
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A bill has been introduced in South Korea that would require domestic virtual-asset exchanges to review all listed digital assets within one year after the law takes effect.
According to the National Assembly’s bill information system on November 2, Rep. Jeong Tae-ho of the Democratic Party submitted the proposed Digital Asset Market and Digital Asset Business Act on October 29. It is the fourth digital-asset framework bill introduced by the party, following proposals from Reps. Min Byung-duk, Lee Kang-il and Park Sang-hyuk.
The bill largely mirrors the overall regulatory framework of earlier proposals, but stands out for spelling out standards for exchange listing reviews and for maintaining or ending trading support. Under the proposal, digital assets already trading on exchanges when the law takes effect would initially be recognized as having received lawful trading support decisions. They would still have to undergo a maintenance review under the new legal standards within one year of the effective date.
Stricter standards would apply to digital assets seen as posing a serious risk to investor protection or market order. Those assets would have to undergo priority review within six months after the law takes effect. If they fail to meet listing-maintenance requirements, exchanges would have to begin procedures to end trading support. The bill also requires that users be given an opportunity to sell their holdings or transfer them elsewhere during that process.
The proposal would establish digital-asset trading support as a separate business category and require regular eligibility reviews even after listing. Exchanges would have to verify at intervals set by presidential decree whether listed assets continue to meet the requirements. They could delist assets if offering documents contain false statements, if listing agreements are materially breached, or if an asset falls short in a maintenance review.
The bill also codifies user-protection procedures during delistings. Exchanges would, in principle, have to give issuers an opportunity to present their case. If a delisting is expected to have a significant impact on users, exchanges would also have to gather opinions and provide a liquidation-trading period and an asset-transfer period. They would also have to notify users in advance of the reasons for delisting, the schedule and the user-protection measures.
The proposal also includes steps to ensure objectivity and independence in listing reviews. Exchanges would have to establish a separate trading support review committee to assess technical stability, issuance and distribution structures, investment risk and the impact on market order. They would also have to disclose review standards and procedures, while the Financial Services Commission would be authorized to set detailed criteria.
The bill further requires that the organization responsible for listing reviews and decisions on maintenance or termination be operated separately from the business division. If the legislation clears the National Assembly, digital assets already listed on existing exchanges would also undergo eligibility checks under the new standards within up to one year under transitional measures.