Exchange Cleanup | Why are major South Korean cryptocurrency exchanges delisting cryptocurrencies on a large scale?

In recent times, Bithumb and UPbit, the two largest cryptocurrency exchanges in South Korea in terms of trading volume, have made decisions to delist multiple cryptocurrencies, suspend trading, or issue investment warnings. What are the reasons behind these actions?

On February 28th, UPbit suddenly announced the delisting of 17 cryptocurrencies. The main reason most cryptocurrencies on UPbit were delisted was due to a lack of communication between cryptocurrency developers and the exchange. As a general explanation for warning about cryptocurrency risks, the UPbit team stated: "Due to difficulties in communication with the project's technical team, there may be issues with technical support. Low liquidity makes coins/tokens vulnerable to price manipulation. Therefore, to protect investors, we have issued an investment warning." Due to similar issues, Bithumb also issued warnings of "high-risk cryptocurrencies" for multiple cryptocurrencies and later released a statement. The company indicated: "According to Bithumb's 'High-risk Cryptocurrency Selection Policy,' Bithumb has marked and announced Populous (January 16, 2020) and CyberMiles (January 23, 2020) as high-risk cryptocurrencies. Bithumb continues to monitor the eligibility of traded currencies, but the reasons for designating cryptocurrencies as high-risk assets have not been resolved." Since the beginning of 2020, both UPbit and Bithumb have made quality control of cryptocurrencies on their exchanges a top priority. Both companies have adopted a strict policy where if developers of reviewed cryptocurrencies fail to address the exchange's concerns, the exchange considers delisting the corresponding cryptocurrency. For example, UPbit's process involves issuing an investment warning, conducting a one-week review of the cryptocurrency, and then evaluating whether developers have made appropriate changes. If UPbit deems that these issues have not been resolved, they will terminate trading support for the reviewed cryptocurrency. "When an exchange initiates a review process on whether to delist a cryptocurrency, many factors are considered. So far, UPbit and Bithumb have mentioned the following reasons for delisting cryptocurrencies: 1. Lack of willingness from cryptocurrency developers to communicate with the exchange to resolve issues 2. Lack of understanding of the Korean cryptocurrency market 3. Inactive developers 4. Low trading volume and overall demand from local investors 5. Market manipulation or price manipulation issues." So, what does this mean for the Korean cryptocurrency market? This could be a good move. Leading exchanges implementing comprehensive quality control measures may set a precedent within the industry, where cryptocurrencies that do not meet standards or do not provide sufficient support to exchanges may face the risk of delisting. The higher standards set by UPbit and Bithumb create a more manageable environment for investors and exchanges, as they filter out cryptocurrencies with relatively low market demand, trading volume, and developer activity. Is this a broader trend? The timing of UPbit and Bithumb's quality monitoring of cryptocurrencies coincides with the call from G20 countries to adopt the latest cryptocurrency guidelines from the Financial Action Task Force (FATF). FATF is a financial regulatory agency under the G7 countries, which has requested G7 and G20 member countries to strengthen AML and counter-terrorism financing policies for cryptocurrency exchanges. In response to FATF's call for stricter regulatory frameworks, exchanges may start taking proactive measures to create a safer trading environment for investors. In 2020, regions like Hong Kong, Switzerland, and Japan have already adopted guidelines issued by FATF to implement stricter policies for cryptocurrency exchanges and transactions. However, despite Japan's strict regulations on cryptocurrencies, the country has not taken proactive measures like South Korea to delist tokens in trading. This article is from our partner LONGHASH. For more information, you can refer to the following related articles: - South Korean Parliament Passes "Special Financial Transactions Law," Officially Legalizing Cryptocurrency Trading - South Korea Aims for Institutionalization of Cryptocurrency to Attract Foreign Investment Join Telegram now to get the most accurate blockchain news and cryptocurrency updates!