South Korean cryptocurrency exchanges, under the Digital Asset Exchange Alliance (DAXA), have introduced new guidelines to prevent large-scale delistings as they prepare for upcoming legislation aimed at curbing market manipulation.
Standardized Criteria for Digital Asset Trading
The guidelines established by DAXA are designed to standardize the criteria for supporting and terminating digital asset trading on exchange platforms. The alliance, which comprises major South Korean cryptocurrency exchanges, made this announcement on Tuesday, emphasizing a systematic approach to reviewing 1,333 existing digital assets over the next six months.
Collaboration with Authorities and Experts
DAXA stated that it will work closely with financial authorities and industry experts to refine these standards, aiming to enhance transparency and compliance within the sector. This collaborative effort is expected to reduce the risk of assets being delisted from exchanges unexpectedly.
Key Elements of the Guidelines
- Transparency in Information Disclosure: Exchanges are required to disclose essential information such as white papers and significant announcements from issuers.
Prohibits exchanges from charging fees or receiving kickbacks for listing tokens unless explicitly stated. - Comprehensive Review Criteria: The review criteria cover issuer credibility, user protection measures, technology and security standards, and regulatory compliance.
- User Protection Measures: Includes issuing termination notices and providing grace periods for users to manage their assets if a delisting occurs.
Pre-emptive Application of Best Practices
According to DAXA, major domestic exchanges have been preemptively applying key criteria of these best practices since late 2023. As a result, the likelihood of large-scale delistings occurring simultaneously is considered low.
Upcoming Virtual Asset User Protection Act
The introduction of these guidelines comes ahead of South Korea’s “Virtual Asset User Protection Act,” which is set to take effect on July 19. This legislation was enacted in response to the collapse of FTX and aims to implement stricter controls and standardized practices across exchanges to prevent market manipulation and protect investors.
By setting these new guidelines, South Korean crypto exchanges under DAXA are taking proactive steps to ensure stability and transparency in the market. This move is expected to instill greater confidence among investors and foster a more secure trading environment ahead of the new regulatory framework. The collaborative effort with financial authorities and adherence to rigorous review criteria underscores the industry’s commitment to safeguarding user interests and maintaining market integrity.
