06/07/2023 (South Korea) - A consortium of leading South Korean cryptocurrency exchanges, known as the Digital Asset Exchange Association (DAXA), has launched a system designed to alert users of significant price fluctuations in the cryptocurrency market. The group, which includes Upbit, Bithumb, Coinone, Korbit, and Gopax, believes this system will help mitigate information asymmetry.
The new system will notify users when there are sudden increases or decreases in cryptocurrency prices within a single day. It will also alert users to sharp changes in daily trading volumes or deposits.
This development follows DAXA's recent announcement of ethical standards for its members. These standards, known as the DAXA Internal Control Standards and the Code of Ethical Conduct for Virtual Asset Operators, provide guidelines on how virtual asset service providers should operate. One key guideline stipulates that when listing or delisting cryptocurrencies, exchanges must involve a third-party legal expert who has no conflict of interest.
In addition to these industry-led initiatives, the South Korean National Assembly has passed legislation to establish a legal framework for cryptocurrency regulation. The new law mandates that digital asset service providers separate user funds from their own and insure customer deposits.
Furthermore, the upcoming Virtual Asset User Protection Act requires these providers to keep crypto reserves in cold wallets and maintain transaction records. The Korean Financial Services Commission will inspect these providers, while the Bank of Korea will supervise the data they handle.
These regulatory efforts come in response to the growing adoption of digital assets in South Korea and the need to protect investors from fraudulent activities in the sector. The country has been working to prevent fraud in the digital asset sector following the collapse of Terraform Labs and its cryptocurrency projects, TerraUSD and Terra LUNA, which resulted in significant losses for investors.