The Korean government and financial regulators appear keen to ensure that the May’s Terra ecosystem crash – what they call the “terra/LUNA crash” – becomes a turning point for the sector. cryptocurrency, with a bunch of new regulations in place.
The new head of a top regulator has led those vowing to implement the changes, calling for the creation of a system that offers investors “fairer“.
Chief among the new regulations will be the upcoming launch of a new government-appointed regulator that will be in charge of regulating the crypto sector. As reported, the body is slated to be named the Digital Assets Commission (literal translation from English) and could launch in the next two weeks.
This body – unlike most other financial regulators that also deal with issues related to traditional finance – will be devoted entirely to the regulation of the cryptocurrency market. It will also be factored into policy formulation for the industry.
Also launching in the coming weeks or months will be a joint board comprised of the five largest crypto exchanges in the country: Upbit, Bithumb, Coinone, Korbit, and Gopax. This board will be responsible for making decisions on the listing and delisting of coordinated tokens, and, Donga A Ilbo reported, is currently working on a set of industry-wide standards.
On Monday, the government and the ruling People’s Power Party held a meeting in Parliament on the topic of crypto policy after the “terra/LUNA incident,” according to Segye Ilbo. The parties said their aim was to “restore fairness in the virtual asset market” and “protect investors”.
Also in attendance was the newly appointed head of the Financial Supervisory Service (FSS) Lee Bok-hyeon, who has vowed to make crypto regulation one of his top priorities.
Lee, who took office on June 7, is quoted as saying:
“We will closely look at the impact of the spread of cryptocurrencies on the stability of the financial system and on consumer protection. We will also seek to close the gap in investor protection until a publicly regulated system is established. “
However, Lee also echoed the position expressed by the ruling party, stating that while regulators and politicians need help creating a “reasonable management system“, the industry needs empowered to “self-regulate”. The FSS director called for the “active involvement of private sector experts,” stating that the industry’s role in regulation needed to be “emphasized.”
The five exchanges stated that they would not allow a “repeated confusion among investors” that followed the incident, as each platform made its own decision to remove LUNAC tokens ( formerly LUNA) at various times – leading to market turmoil.
Meanwhile, the People’s Power Party also expressed its intention to speed up the implementation of the new law. Seong Il-jong, chairman of the party’s policy committee, is quoted as saying that the party is currently working on the “Blockchain Basics Act” (literal translation) aimed at “supporting the Industry 4.0 era”.
The FSS director and other officials at the meeting also confirmed that the Financial Services Commission (FSC) probe of the LUNAC issuer Terraform Labs and the crash itself is still ongoing.
Prosecutors are also conducting their own investigation.
Much may hinge on whether financial regulators can determine whether they can treat LUNA as a security. Under current South Korean law, securities can be regulated under the terms of the Capital Markets Act, Chosun Ilbo reported. Tokens that are not classified as securities cannot be controlled by the FSC or FSS.
Lee said he would “look into” the matter.
He is also committed to promoting “fairness” in the crypto ecosystem, stating:
“In cryptocurrency trading, large-scale and [anonymous] transactions can cause information asymmetry and unfair trading. Steps need to be taken [to resolve this]. ”