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The top five crypto exchanges in South Korea have decided to form a consultative body that will prevent a situation similar to the Terra crash from happening again, according to South Korean news outlet YNA.
The exchanges involved are UpBit, Coinone, Bithumb, Gopax, and Korbit. They plan to develop a strict screening process for listing cryptocurrencies that will be ready by this year’s second half.
This resolution results from the divergence in how crypto exchanges dealt with the Terra crash. While some were quick to delist the token, some didn’t, causing further losses for customers who kept buying. The exchanges will now look to avoid similar situations in the future.
The plan results from a meeting between the exchanges and the government. As part of the process, the exchanges have signed a business agreement and will now work on developing better listing-related standards to be used during any emergency.
Korean exchanges plan better regulations
According to reports, the proposal involves creating three different committees out of the consultative body to be saddled with compliance monitoring, market monitoring, and transaction support.
It plans to publicly announce the first part of the plan, a virtual currency warning system, and delisting standards in September. There will also be information on digital assets such as the evaluation reports and shout white papers.
Additionally, there will be a crisis plan to handle any situation similar to the Luna crisis. The body will discuss the plan and provide guidance within 24 hours.
There are several other functions that the body will have to perform. This includes publishing crypto screening guidelines and introducing a new period for evaluating risks.
Reports claim that the group won’t only evaluate projects for their technical efficiency alone. It will now look at the project’s feasibility and assess factors such as whether it’s likely to be a Ponzi fraud.
Furthermore, it will consider the project’s potential for other crypto-related crimes such as money laundering. The body will seek external experts’ help to review new cryptocurrencies.
With the body’s comprehensive functions, including investor education, it is clear that stakeholders in South Korea are doing everything to prevent another Luna situation from happening. In addition, government authorities are already making efforts to protect crypto investors.
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