Crypto-Holding Kosdaq Firms Face Rising Delisting Risk Under Tougher Listing Rules

Concerns are mounting that Kosdaq-listed companies holding virtual assets, or cryptocurrencies, could face a greater risk of delisting as revised listing rules that tighten requirements for staying on South Korea’s stock market are set to take effect, Chosun Ilbo reported.

The new rules will be implemented on July 1, the newspaper said on June 29. Under the changes, stricter market-capitalization requirements for Kosdaq-listed companies could directly affect digital asset treasury, or DAT, firms.

Bitmax closed at 1,228 won on June 26, down 6.3% from the previous trading day, according to the Korea Exchange. Its market capitalization was 13.1 billion won, based on the closing price, below the 20 billion won minimum that will apply in the second half.

Parataxis Ethereum and Bit Planet had market capitalizations of 26.8 billion won and 33.1 billion won, respectively. Both remain above the 20 billion won threshold for the second half, but Parataxis Ethereum could fall short if the requirement rises to 30 billion won in January next year.

Parataxis Korea has already been suspended from trading after being designated in April for a substantive review of its listing eligibility due to capital impairment.

Pressure on DAT firms' share prices appears to reflect both falling cryptocurrency prices and weakness in the Kosdaq market. Bitcoin rose above $120,000 in July last year, but turned lower after US-China trade tensions in October and fell to the upper-$50,000 range this month.

DAT firms had previously sought to raise funds through convertible bond and preferred-share issuance. With cryptocurrency prices falling and share prices remaining weak, however, it has become harder for them to defend their market capitalizations.

Under the revised rules, stocks that fail to meet the share-price or market-capitalization requirement for 30 consecutive trading days starting in the second half will be designated as administrative issues. They will then be given a 90-trading-day recovery period. If they still fail to meet the share-price or market-capitalization standard for 45 consecutive trading days after that period, delisting procedures will begin.