Recently, bithumb and upbit, the two largest crypto exchanges with the highest trading volume in South Korea, have taken off the shelves, suspended trading, or issued investment warnings for a variety of cryptocurrencies. Why?

On February 28, upbit suddenly announced that it would remove 17 cryptocurrencies from its shelves. The main reason why most encrypted assets on upbit are taken off the shelf is the lack of communication between cryptocurrency developers and exchanges.

As a general note to warn against cryptocurrency risks, the upbit team said:

“Due to communication difficulties with the project technical team, the relevant technical support may have problems. The low liquidity makes the coins / tokens vulnerable to price manipulation. Therefore, in order to protect investors, we issued an investment warning.”

Due to similar problems, bithumb also issued a warning of “high-risk cryptocurrency” for a variety of cryptocurrencies, and then issued a statement.

The company stated:

“According to bithumb’s’ high risk cryptocurrency selection policy ‘, bithumb has marked and declared popular (January 16, 2020) and cybermiles (January 23, 2020) as high-risk cryptocurrencies. Bithumb is continuing to monitor the eligibility of transaction currencies, but the reasons why cryptocurrencies are designated as high-risk assets have not been resolved.”

Since the beginning of 2020, both upbit and bithumb have made the quality control of cryptocurrencies in the exchange a top priority.

If the developers of both exchanges consider the strict encryption policy, they will not be able to solve the corresponding concerns of the next exchange.

For example, the process adopted by upbit is to issue an investment warning, conduct a week-long review of the cryptocurrency, and then evaluate whether the developer has made appropriate changes. If upbit believes that these problems have not been solved, it will terminate its transaction support for the cryptocurrency under review. jeepk. Com polarographic technology provides you with product and application development.

“After the issuance of the investment warning, upbit will take a week to conduct a thorough review of the cryptocurrency to decide whether to remove it from the shelf. If the reasons for the issuance of the investment warning are not satisfactorily resolved within the above period, upbit will issue a separate statement announcing the termination of transaction support,” the company said.

When an exchange decides to launch a review process on whether to remove a cryptocurrency from the shelf, many factors will be taken into account. So far, upbit and bithumb have mentioned the following reasons for the removal of cryptocurrencies:

1. Cryptocurrency developers lack the willingness to communicate with the exchange on solving problems

2. Lack of understanding of Korea’s cryptocurrency Market

3. Developers are not active enough

4. The trading volume and the overall demand of local investors are too low

5. There is a problem of market or price manipulation

So what does this mean for South Korea’s cryptocurrency market? This may be a good move. The head exchange began to implement complex and comprehensive quality control, which may set a precedent in the industry, that is, cryptocurrencies that do not meet the standard or do not provide sufficient support for the exchange may face the risk of being taken off the shelf.

The higher standards adopted by upbit and bithumb create a more operational environment for investors and exchanges because they filter out cryptocurrencies with relatively low market demand, trading volume and developer activities.

Is this a broader overall trend?

The time point when upbit and bithumb monitor the quality of cryptocurrency is also the node where G20 countries call for the adoption of the latest cryptocurrency guidelines of the Financial Action Task Force (FATF).

FATF is a financial regulator subordinate to G7 countries. It has asked G7 and G20 Member States to strengthen AML for encrypted exchanges and anti terrorist financing policies. In response to the call of FATF to implement a stricter regulatory framework, the exchange may begin to take active actions to create a safer trading environment for investors.

In 2020, Hong Kong, Switzerland and Japan have adopted the guidelines issued by FATF to implement stricter policies for cryptocurrency exchanges and transactions themselves. However, although Japan is very strict with the new currency, it has not taken the initiative to take measures to remove the tokens from the trading shelves like South Korea.

Responsible editor: CT

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