Upbit and Bithumb are removing bad coins and listing unverified meme coins one after another

Major domestic virtual asset exchanges are showing a dual approach as they face a quarterly listing maintenance review that will be fully implemented this year. While they are moving to dispose of poor-quality coins, they are also aggressively listing unverified meme coins. In particular, the number of warning and delisting cases at Upbit and Bithumb, the top 1st and 2nd exchanges in Korea, has surged since the fourth quarter of last year, while the number of new listings has also increased significantly, raising investor concerns. When the listing review system, which is scheduled to start as early as this month, is fully implemented, there are growing concerns that a large-scale delisting may occur.

According to the industry on the 9th, the number of warning and delisting items at Upbit increased from 0 in the third quarter of last year to 5 in the fourth quarter, and at Bithumb from 1 to 7. During the same period, the number of new virtual assets listed on the two exchanges increased about 5-fold to 57. In particular, Bithumb listed 36 new virtual assets from October to December last year, which is equivalent to 12 new listings per month.



In particular, among the newly listed coins, there are several meme coins that do not meet the review criteria presented by DAXA. According to DAXA's listing review criteria, exchanges must verify the reliability of the issuer, the existence of user protection measures, the level of technology and security, and compliance with regulations when conducting a listing review. Meme coins that do not disclose even basic information such as the issuer, operator, and circulation plan do not meet the listing requirements. Representative examples listed on Upbit are BONK, PEPE, and MEW, and on Bithumb are GOAT, MOODENG, and SUNDOG.

The background of the simultaneous surge in listings and delistings is the incompleteness of regulations. The Digital Asset eXchange Alliance (DAXA) introduced joint guidelines for listing review last July to coincide with the implementation of the Virtual Asset Service Providers Act, but gave a 6-month grace period for the quarterly listing maintenance review. Moreover, as it is a self-regulatory nature, it still lacks substantial binding force. Currently, new listings are being carried out by each exchange based on their own standards, so coins that do not meet DAXA's review criteria can still be listed.

In this institutional vacuum, exchanges are showing a dual approach. On the one hand, they are moving to dispose of poor-quality coins in accordance with DAXA's guidelines, while on the other hand, they are aggressively listing coins with insufficient verification to secure transaction fee profitability. At Upbit, SBD and DAD were delisted, while at Bithumb, FIT and TEMCO were delisted, but during the same period, a large number of unverified meme coins were listed.

As the arbitrary operation of the exchanges continues, the financial authorities have also moved to strengthen regulations. The Financial Services Commission announced on the 7th that it will establish virtual asset review standards in line with global standards. To this end, it has been operating a task force on the listing and delisting system of virtual asset exchanges since November last year.

Investors' concerns are growing even further. There is a precedent where Upbit simultaneously delisted more than 20 virtual assets with high regulatory risks when the Special Financial Transactions Act was implemented in 2021. One investor said, "While qualitative requirements are included in the listing review, the specific criteria are not disclosed, making it difficult to predict the possibility of delisting the coins I have invested in."

A DAXA official said, "The newly listed virtual assets are also subject to the listing maintenance review," and "While the obligation of exchanges to conduct quarterly listing maintenance reviews and the review criteria are based on self-regulation, and DAXA cannot impose sanctions, the Financial Supervisory Service's 'Virtual Asset Business Operator Inspection Business Operation Plan' announced in the second half of last year stipulates the inspection of compliance with self-regulation, so if virtual assets that do not meet the guidelines are supported for trading, there will be inspections and sanctions by the authorities." This suggests that the listing review, which started as self-regulation, will gain practical coercive power.

Reporter Kim Jung-woo

woo@decenter.kr