Even After Reporting Under the Special Act on Virtual Assets... Persistent Cryptocurrency Listing Pump

Soaring Over 3000% in a Day and Plummeting
"Regulations Beyond the Special Act on Virtual Assets Needed, Comparable to Capital Markets Act"

According to the amendment to the Act on Reporting and Using Specified Financial Transaction Information (the Specified Financial Transaction Act), domestic cryptocurrency exchanges are now subject to financial authorities' regulations. However, cryptocurrencies still exhibit the so-called "listing pump," where prices fluctuate wildly immediately after listing. There are concerns about potential investor losses as some investors attempt to capitalize on these listing pumps.

On the 28th, industry sources reported that cryptocurrencies Aave and 1inch Network were listed on the domestic cryptocurrency exchange Upbit on the 27th. The issue was the enormous price volatility immediately after listing. Aave, which had an opening price of 346,650 KRW, surged to 880,000 KRW within one minute of listing before quickly dropping to the 570,000 KRW range. Similarly, 1inch Network opened at 4,165 KRW but sharply rose to 23,300 KRW before falling back to around 6,800 KRW.

With the registration of virtual asset service providers under the amended Specified Financial Transaction Act, there were expectations that such volatility would decrease. Implementing the Know Your Customer (KYC) system, which requires collecting the identities of investors trading cryptocurrencies, reduces the likelihood of funds with unclear origins entering the market. Currently, among domestic cryptocurrency exchanges, Upbit and Korbit have received registration certificates from the Financial Intelligence Unit (FIU) under the Financial Services Commission and are complying with related regulations.

Nevertheless, the so-called "listing pump" phenomenon, where cryptocurrencies surge immediately after listing, has continued recently. A representative example is Nucypher, which was listed on Upbit on the 15th. Nucypher's opening price was 314 KRW, but it soared to 10,000 KRW on the day of listing, marking a 3,085% increase within a day. It took less than six hours for the price to fall back to the 1,000 KRW range.

The problem is that many investors are attempting to exploit these listing pumps. As of 9:40 a.m. on that day, the trading volume of 1inch Network on Upbit reached 2.8645 trillion KRW. The total trading volume on Upbit the day before 1inch Network's listing was approximately 4.5032 trillion KRW.

As a result, numerous investors have suffered losses. Kim Jin-kyung (29, pseudonym), who invested during Nucypher's listing, said, "The cryptocurrency market had been relatively calm recently, so I tried to make a profit through short-term trading. However, the price dropped so quickly that I couldn't respond in time and suffered significant losses."

Consequently, there are calls for cryptocurrency listings to require procedures similar to stocks, where multiple institutions participate in setting the public offering price. In the case of stocks, the underwriter sets the public offering price after consulting with the issuer based on institutional investors' demand forecasts. Professor Hong Ki-hoon of Hongik University's Department of Business Administration stated, "To set the public offering price, a more detailed system beyond the Specified Financial Transaction Act is necessary. Regulations comparable to the Capital Markets Act should also be in place."

This content was produced with the assistance of AI translation services.