- South Korean cryptocurrency exchanges, united under the Digital Asset Exchange Alliance (DAXA), have introduced new regulations aiming to prevent large-scale delistings as they anticipate forthcoming legislation designed to minimize market manipulation.
- The newly established guidelines intend to standardize the evaluation criteria for both supporting and delisting digital assets on various trading platforms, as stated by DAXA on Tuesday.
- In a comprehensive review period over the next six months, approximately 1,333 digital assets will undergo scrutiny to ensure consistency, with DAXA collaborating with financial authorities and experts to refine these standards further.
South Korean crypto exchanges introduce guidelines to prevent mass delistings, enhance transparency, and ensure compliance ahead of new legislation.
New Guidelines for Digital Asset Trading
The guidelines aim to bring transparency and uniformity in the processes of supporting and delisting digital assets across South Korean exchanges. This move comes as a proactive measure to align with the upcoming “Virtual Asset User Protection Act,” designed to protect investors and prevent market manipulation.
Collaboration for Enhanced Standards
The DAXA consortium, which includes major South Korean exchanges, is set to collaborate with financial authorities and industry experts to improve their standards. Key elements of the guidelines emphasize issuer credibility, user protection measures, technological and security standards, and regulatory compliance. By providing required information like white papers and significant issuer announcements, exchanges aim to bolster transparency and user trust.
Focus on Transparency and Compliance
One of the fundamental tenets of the new guidelines is the emphasis on transparency in information disclosure. Exchanges are prohibited from charging fees for trading support unless explicitly stated, thereby preventing backdoor payments and ensuring a fair listing environment. This transparency aims to reduce the risk of unwarranted delistings and enhance compliance across the board.
Implications of the Virtual Asset User Protection Act
Set to take effect on July 19, the “Virtual Asset User Protection Act” was enacted in response to the market upheaval caused by the collapse of FTX. The act mandates stricter controls and standardized practices, compelling exchanges to adhere to higher standards to safeguard investor interests. This comprehensive legislative effort underscores the necessity for rigorous evaluation criteria and the transparent operation of exchanges.
Review and Evaluation Period
Over the next six months, DAXA will conduct a thorough review of 1,333 existing digital assets. This systematic approach aims to ensure that assets listed on exchanges meet the newly established standards, thereby mitigating the risk of sudden, large-scale delistings. The review process will focus on strengthening investor protection measures, including providing termination notices and grace periods for users to manage their assets appropriately.
Conclusion
South Korea’s proactive measures, reflected in DAXA’s new guidelines, are poised to enhance transparency, compliance, and investor protection within the crypto market. As the “Virtual Asset User Protection Act” takes effect, the systematic review and standardized practices promise a safer and more reliable trading environment. The collaborative efforts between exchanges and regulatory authorities signify a significant step towards maintaining market integrity and safeguarding investor interests.
