Major South Korean crypto exchanges have decided to form an advisory body to prevent the recurrence of similar incidents like the Terra (LUNA) ecosystem crash that resulted in major losses.
Exchanges including Upbit, Bithumb, Coinone, Korbit and Gopax are looking to offer strict and standard screening measures before listing cryptocurrencies by the second half of 2022, according to a South Korean news outlet. YNA announced June 13.
Notably, the exchanges resolution comes after most trading platforms have been in the spotlight due to a lack of unison in handling the collapse of the Terra ecosystem.
The latest plan to avoid similar cases emerged from a meeting with the government dubbed “Restore fairness to the virtual asset market and protect investors.”
Development of testing guidelines
Under the first part of the deal, the exchanges would have signed a trade agreement before forming the joint advisory body. The next step is to develop improved registration-related standards that can be used as a communication channel to respond to emergencies.
According to the proposal, the advisory body will be divided into transaction support, market monitoring and compliance monitoring.
The first big part of the plan will be available in September when a virtual currency warning system and delisting standards are made public. It will also provide cryptocurrency information like white papers and valuation reports.
In a crisis like the LUNA crash, the advisory body will develop crisis plans and discuss factors such as whether it is appropriate to allow deposits and withdrawals. Feedback is supposed to be offered within 24 hours.
By October, the body is also expected to issue new crypto screening guidelines alongside the introduction of a risk assessment period.
The group acknowledged that it would be moving away from the previous approach of evaluating cryptocurrencies based on technical efficiency. However, the new directive will examine the feasibility of a project by assessing factors such as Ponzi-type fraud.
Additionally, the policy will explore other crypto-related flaws, such as the potential for money laundering, while including input from outside experts when reviewing new virtual currencies.
Elsewhere, exchanges will take action when there is a high risk of money laundering or anomalous additional issuances that are unrelated to the white paper.
Additionally, the body will be in charge of investor education, where exchange users will be required to access educational materials before purchasing a digital asset. In accordance with consumer protection, all crypto investment advertisements will be accompanied by disclaimers.
Notably, South Korean authorities had been pushing to form a committee focused on strict crypto regulation in the aftermath of the Terra crisis.