[비즈한국] Starting in June, crypto exchanges and non-profit corporations have been permitted to sell their digital assets. While there was interest in which exchange would be the first to do so, three weeks have passed since the policy took effect, and no venue has yet announced a plan to sell. With the scope of eligible assets limited by strict conditions, critics point out that small-scale "coin-only" exchanges are so opaque regarding their asset holdings that increased oversight is necessary.
On June 1, the path opened for domestic crypto exchanges to sell their holdings of digital assets. This measure was implemented as part of a roadmap to facilitate corporate participation in the digital asset market. Previously, corporations had been restricted from trading digital assets since 2017 due to concerns over money laundering and market overheating, but with the introduction of the User Protection Act, authorities began allowing corporate market entry.
According to the "Guidelines for Digital Asset Sales by Crypto Asset Service Providers" released by financial authorities in May, the only entities permitted to sell are exchanges registered as Virtual Asset Service Providers (VASPs) under the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Transaction Act). This includes both those whose new or renewed registration applications have been accepted and those currently under review. However, exchanges that are in the process of closing or suspending operations are excluded.
The conditions for sale are stringent, as authorities prioritized mitigating the impact on the market. Permissible reasons for selling are limited to: △payment of taxes such as corporate tax, △covering operating expenses such as payroll, or △cases where there is a clear risk of default on other legal obligations. In other words, companies can only sell digital assets when their liquidity is insufficient to maintain normal operations. Sales intended to fund investments or new business ventures are not permitted.
There are also restrictions on the types of digital assets that can be sold. Sales are only allowed for assets that rank within the top 20 by market capitalization (based on the semi-annual average) on all five domestic KRW-market exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax), and which are supported for trading on at least three of those exchanges.
When selling, the assets must be distributed and sold across at least two KRW-market exchanges, and internal trades are prohibited. Before selling, a board resolution must be passed, the plan must be publicly disclosed, and the sale must be completed within three months. The maximum volume allowed for daily sale is limited to 10% or less of the total planned volume, and must not exceed 5% of the average daily trading volume of the exchange performing the sale over the previous month.
Perhaps due to these strict requirements, no sell plans have emerged three weeks after the policy's implementation. A service provider wishing to sell must disclose their plan on their own platform, the exchanges to be used, and the Digital Asset Exchange Association (DAXA) website within two business days of the board resolution and at least three business days before the scheduled start of the sale.
Given the condition that the company must effectively be short on cash to the point of struggling with operating costs, coin-only exchanges (which do not handle KRW) that are suffering from losses are essentially the intended target for these sales. However, critics point out that since there are few such venues left in the market and their current asset holdings are unknown, the policy may not be practical.
According to the Korea Financial Intelligence Unit’s VASP registration status, there were 27 registered providers as of May 22. Excluding OKBit (operated by Foris DAX Korea Ltd.) and Coinbit (Exia Soft), which have shut down, and seven providers registered only for digital asset transfer, storage, and management, only about 18 exchanges remain. However, many of these coin-only exchanges appear to be effectively inactive—with no trading for months or no announcements for over a year—meaning the number of venues actually capable of selling is likely even lower. A crypto industry source stated, "I understand that there are only about 10 coin-only exchanges that have completed or are currently in the process of renewing their business registration."
Another problem is the difficulty in confirming which digital assets and how much of them coin-only exchanges actually hold. For large-scale exchanges like the KRW-market venues, the "Accounting Supervision Guidelines for Digital Assets" require them to disclose information such as the volume and market value of customer-entrusted assets in their financial statements, broken down by asset type. This allows for verification of the assets held by the exchange, assets entrusted by members, and the types and amounts of assets disposed of by the exchange.
For example, Upbit (Dunamu), the industry leader, held 2.2097 trillion KRW in digital assets as of the first quarter, including Bitcoin, Ethereum, and Tether. Specifically, they held 16,871 Bitcoins, worth over 2 trillion KRW. During the same period, the scale of digital assets held by Upbit on behalf of its members reached 65 trillion KRW.
However, small-scale coin-only exchanges do not disclose their financial statements. While financial authorities expanded the scope of oversight in December 2023 from "K-IFRS applicable companies such as listed firms" to "all entities subject to external audit," coin-only exchanges are not subject to external audits and therefore have no obligation to follow the supervision guidelines.
Some coin-only exchanges publish digital asset deposit audit reports after undergoing due diligence by accounting firms to reveal the ratio of customer-entrusted assets to company-held assets. However, because this is voluntary, many choose not to disclose even this information. A financial authority official stated, "Small-scale operators can follow the guidelines if they wish, but there is no obligation to disclose it internally or publicly," adding, "It is difficult to monitor exchanges that are not subject to external audits."
An industry insider noted, "Coin-only exchanges in difficult situations don't actually hold many digital assets. Many haven't been able to operate properly since the Special Financial Transaction Act took effect in March 2021, but because costs keep accruing, they have been surviving through external debt or by selling off their own shares. Active selling will only be possible when we see companies that continue to operate—perhaps by linking with banks for real-name accounts or finding new revenue streams like stablecoins."