Virtual currencies’ exit
Major cryptocurrency exchanges here are speeding up the removal of “alt-coins,” meaning all virtual currencies other than bitcoin. Last weekend, Bithumb, the country’s largest cryptocurrency exchange by transactions, delisted 24 virtual currencies from its trading platform. Put together, cryptocurrency exchanges have of late delisted more than 40 alt-coins or placed them on warning lists. Most of the removed virtual currencies were the so-called “kimchi coins,” being traded only on the domestic market. About a quarter of these kimchi coins were weeded out in just a week
Investors are suffering increasing damage. As cryptocurrency exchanges do not explain the criteria by which they throw out specific virtual currencies, most investors are exposed to the risk of “delisting in the dark.” Bewildered investors say: “These cryptocurrency exchanges randomly listed virtual currencies to maximize their commission revenue.
Now, they are suspending their trading without explanation. What should we do?” The financial authorities, which did little until now to control the reckless listing, are also standing on the sidelines while virtual currencies are being delisted left, right and center.
The government, which stood idly by during the “coin frenzy,” has set about tightening rules belatedly, obligating cryptocurrency exchanges to register with the financial regulators by Sept. 24. If the requirement goes into effect, most of the 200 or so exchanges will go out of business and alt-coins they’ve been trading will be delisted. The mass removal of these digital coins by cryptocurrency exchanges seems to be part of a move to “prune” minor cryptocurrencies ahead of others before the deadline comes.
The jitters in the digital coin market are a global trend. The aggregate value of about 10,000 virtual currencies listed on worldwide cryptocurrency exchanges has fallen from 2,880 trillion won to 1,780 trillion won, shedding nearly 1,000 trillion won over the past month in what the media is referring to as a “coin run” phenomenon. Adverse effects will be felt more keenly in Korea than anywhere else, given the unusual investment zeal in this country. This is no time for the government to sit idly by and watch.