"Unified Exchange Listing Reviews Spark Concerns Over Market Vitality"

# South Korea Proposes Establishing Independent Body for Crypto Listings and Market Surveillance Concerns Raised Over Reduced Exchange Autonomy Despite Investor Protection Intentions South Korea is considering the creation of an independent external body to manage the listing and surveillance of digital assets, shifting away from the current self-regulatory model managed by cryptocurrency exchanges. Through the forthcoming Digital Assets Basic Act, lawmakers are assessing proposals to centralize listing oversight from exchanges to an external entity. Nevertheless, there are concerns about diminishing exchange autonomy and decreasing market competitiveness. # Legislative Push for External Oversight According to industry insiders on October 30, Rep. Min Byung-deok of the Democratic Party of Korea intends to introduce the Digital Assets Basic Act next month. The proposed bill will move listing reviews and market surveillance responsibilities to committees under the Korea Digital Asset Industry Association (KDAIA). These committees will handle the examination of listing requests, decisions about maintaining or delisting assets, and monitoring for unfair trading practices. Under this new framework, digital asset companies would be obliged to join the association. Listing applications must undergo a committee review to ensure regulatory compliance and suitability. # Shifting Critical Roles to External Committees The proposed changes aim to address the flaws in the current self-regulatory system. In July 2022, the Digital Asset Exchange Alliance (DAXA), consisting of several cryptocurrency exchanges, issued "Model Standards for Virtual Asset Trading Support" to set autonomous guidelines for listing criteria. These standards required exchanges to evaluate both formal and qualitative aspects of digital assets before trading approval, and to reevaluate existing listings every six months. Despite these measures, criticisms of inconsistent review processes, varying judgment standards, and lack of uniform application persisted. This demonstrated the need for systemic improvements. Instances of speculative trading following abrupt price changes in newly listed assets, such as AVAIL and MOVE, intensified calls for stronger oversight. Rep. Min highlighted these structural issues during a legislative forum in September, stating, “Exchanges benefit from higher transaction volumes via fee revenue. Letting exchanges autonomously decide on delistings poses potential conflicts of interest, even with DAXA’s guidelines. Ultimately, these conflicts arise because exchanges maintain delisting authority.” To mitigate these conflicts, the proposed legislation mirrors Japan’s model. In Japan, the Financial Services Agency oversees the Japan Virtual Currency Exchange Association (JVCEA), which reviews digital assets before listing. The JVCEA operates a whitelist of assets meeting strict criteria, allowing only preapproved tokens for local exchange listings. Although initially restrictive with about 60 tokens as of 2023, Japan recently introduced a Greenlist system easing entry requirements for compliant exchanges. # Advocates Sound Alarms Over Autonomy and Competitiveness The proposed centralization raises concerns among industry professionals. Critics argue that stricter listing barriers might push promising blockchain projects to seek opportunities overseas, potentially marginalizing domestic investors from crucial information and investment opportunities. Cho Yoon-seong, a senior researcher at Tiger Research, warned, “Standardizing listing reviews under an independent body could stifle competition among exchanges. Liquidity may migrate to major exchanges, creating a more concentrated market.” He further noted that “if domestic listings become limited, South Korean investors might turn to international exchanges with broader options. Global projects aiming to penetrate the domestic market may abandon their efforts due to regulatory hurdles, ultimately weakening the competitiveness of the local market.” Concerns also arise over potential inefficiencies if one entity monopolizes the listing process. Critics foresee longer approval times, increased costs, and risks of restricted market diversity. Kim Hyo-bong, a lawyer at Pacific Law Firm, pointed out, “Entrusting listing and delisting solely to associations or regulatory bodies invites significant limitations in real-time responsiveness to market conditions, specialized expertise in listings evaluation, and risk management for listings.” However, Kim acknowledged the oversight need, stating, “Exchange autonomy in market operations carries the risk of conflicts of interest. Listing criteria and procedures should be legally defined, with regulatory oversight and post-facto controls.” As the legislation develops, stakeholders remain divided over whether centralizing listing and surveillance functions can effectively balance investor protection with market efficiency and dynamism.