- South Korea’s Digital Asset Exchange Alliance (DAXA) announces new self-regulatory standards to re-evaluate over 1,300 cryptocurrencies.
- The implementation aligns with the newly enacted Virtual Currency User Protection Act, aimed at curbing illegal market activities and enhancing user safety.
South Korea’s Progressive Crypto Regulatory Framework
In a significant development on July 2, 2024, the Digital Asset Exchange Alliance (DAXA), the leading industry group for crypto assets in South Korea, unveiled new self-regulatory standards. This announcement comes in response to the activation of the Virtual Currency User Protection Act, a pivotal piece of legislation designed to combat illegal activities in the cryptocurrency market such as insider trading, price manipulation, and fraud, while also ensuring compensation mechanisms for users.
Enhanced Scrutiny and Evaluation
The re-evaluation process set to span six months targets over 1,300 crypto tokens currently traded on Korean platforms. This rigorous review will assess various critical aspects including the credibility of the issuer, the transparency of information, user protection measures, and adherence to technological and security benchmarks. DAXA plans to conduct quarterly audits to ensure ongoing compliance with these stringent criteria.
Moreover, exchanges are required to establish independent decision-making bodies for token listings, ensuring that listing and delisting decisions comply with the latest regulations. The decision-making process will be meticulously documented and preserved for a duration of 15 years.
In addressing concerns about the potential mass delisting of tokens due to these re-evaluations, DAXA clarified that such an outcome is unlikely. The organization stressed that the gradual nature of the review process and adherence to established listing rules should mitigate the risk of widespread token removals from the market.
A Robust Approach to Compliance
Since October 2022, major exchanges have been following the Common Guidelines for Transaction Support Examination issued by DAXA, incorporating many aspects of the new standards even before their official implementation. These guidelines have significantly bolstered the examination standards and mandated the maintenance of appropriate records, further solidifying the integrity of South Korea’s cryptocurrency market.
Market Dynamics and Global Impact
Reflecting on the activity within South Korea’s cryptocurrency sector, it remains a vibrant and globally significant market. According to Kaiko, a cryptocurrency data provider, the trading volume of the Korean Won on centralized exchanges surpassed that of the US Dollar in the first quarter of 2024, indicating a robust and expanding market presence.
This proactive approach by South Korea serves not only to protect users but also to enhance the overall stability and credibility of the cryptocurrency market, both domestically and globally.