Cryptocurrencies are being delisted or designated as troubled assets in growing numbers as South Korea's digital asset market cools. The number of tokens removed from the country's five largest exchanges has nearly tripled this year, and on Oct. 16 alone, 41 tokens were either delisted or placed under watch. Industry observers say a shakeout is needed regardless of market conditions, given how many tokens were listed with little scrutiny.
An analysis by The Seoul Economic Daily of trading support data from the five largest won-based exchanges, compiled by the Digital Asset eXchange Alliance (DAXA), found that 103 cryptocurrencies were dropped from trading support lists through the third quarter of this year. That is about 2.6 times the 40 recorded in the same period last year. The figure excludes overlaps between exchanges and confirmed cases of token rebranding.
Delistings and watch designations have continued this month. Between Oct. 1 and Oct. 20, the five exchanges announced the end of trading support for or placed under watch a combined 48 cryptocurrencies, excluding duplicates. On Oct. 16 alone, 41 tokens were hit with delistings or watch designations. Trading support was set to end for 20 tokens including Zilliqa (ZIL), Galaxia (GXA) and Delabs Games (DELABS), while 21 others including GemHUB (GHU), Mayflower (MAY) and Ultra (UOS) were placed under watch. Tokens placed under watch undergo a review that determines whether they are delisted.
Behind the sharp increase in troubled tokens this year is a contraction in trading. Under the "best practices for trading support," a self-regulatory framework developed through DAXA, the five exchanges conduct listing maintenance reviews at least once a quarter. Market capitalization and trading volume are among the main criteria examined. When those indicators fall below internal minimum standards and raise concerns about user losses, exchanges proceed with watch designations and reviews on ending trading support.
The problem is that a broad slide in prices and sluggish trading have left a growing number of tokens unable to meet those requirements. According to a survey of virtual asset service providers by financial regulators, average daily trading in South Korea's cryptocurrency market was about 3.1 trillion won ($2.2 billion) in the first half of this year, roughly half the 6.4 trillion won in the same period a year earlier. The total appraised value of cryptocurrencies held in the country stood at 58.9 trillion won at the end of June, down 33% from the end of last year.
Rising geopolitical uncertainty this year, along with a shift in investor attention toward artificial intelligence and semiconductor stocks, has cooled enthusiasm for crypto. Major token prices remain well below year-ago levels. According to CoinMarketCap, bitcoin traded at $81,691 as of 3:30 p.m. on the 20th, down about 26.5% from a year earlier. Ethereum, the largest altcoin, fell 41.2% over the same period to $2,395, a steeper decline than bitcoin.
Experts said the recent rise in delistings tied to shrinking trading could serve as an opportunity to clean up problems that have built up over time. Some caution, however, that a simple drop in trading should be distinguished from a failing business. "If judgments rest on trading volume alone, projects with solid technology that are temporarily out of favor could be pushed out, so business viability, whether development is continuing and disclosure of circulating supply should be assessed together," said Park Hye-jin, a professor of AI and digital assets at Sogang University. "Clearing out troubled assets is a healthy direction in itself, but if assets with real substance, such as tokenized real-world assets or security tokens, do not fill the space, the entire market could shrink."
Others argue that investor protection procedures and exchange accountability need to be strengthened, since a cluster of delistings and watch designations like those on Oct. 16 can magnify investor losses. Hwang Suk-jin, a professor at Dongguk University's Graduate School of Information Security, proposed that "the criteria for delistings and watch designations should be disclosed transparently, and the trading support review system now run under self-regulation should be reflected in the Framework Act on Digital Assets." Park also said reviews should be conducted on an ongoing basis, results should be released at staggered intervals, and an advance warning stage should be established.