In effort to protect the public after the collapse of the TerraUSD stablecoin, South Korean policymakers are pushing the country’s cryptocurrency exchanges to come up with industry guidelines for listing and delisting digital tokens.
Yun Chang-hyun, a legislator who leads the ruling party’s virtual assets committee, has called a second meeting with bourses Upbit, Bithumb, Coinone, Korbit and Gopax. The plan is to agree on a draft of the non-binding guidelines, he said. South Korea would launch a self-regulatory system, like Japan.
“There are a lot of shortcomings compared with traditional finance,” Yun said by phone. Crypto “was neglected for too long without order and discipline.”
The decision comes after the crash of algorithmic stablecoin TerraUSD last month. Around US$40 billion in market value was removed globally for holders of TerraUSD and its sister coin Luna when TerraUSD plunged far below its US$1 peg. The country’s financial regulator said About 280,000 South Koreans had invested in Luna, according to the Financial Services Commission.
Do Kwon and Daniel Shin, the co-founders of Terraform Labs, the company behind TerraUSD and Luna, both born in South Korea. According to its LinkedIn page, Terraform Labs was founded in 2018.
In the wake of the TerraUSD collapse, South Korea joins governments around the world in requesting greater crypto oversight. Much of the recent efforts are prioritized on ensuring that investors in stablecoins are better protected.
Yun didn’t discuss the details of the draft guidelines. Instead of tightening of trading procedures, they’re likely to include stricter reporting requirements to provide transparency.
The ruling party held its first meeting with the five exchanges on May 24.
Yun Sung Han, director of the Korea Blockchain Association, said apart from the planned self-regulatory guidelines, it has also been drawing up a draft manual on behalf of its 19 members setting out comprehensive guidelines for how to operate.
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