Party and Government Virtual Asset Meeting on 13th... Industry to Establish Voluntary Regulation Measures

Preventing the Je2runa and Terra Incidents
Considering a Basic Law on 'Blockchain Platforms' Instead of 'Digital Assets'

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The ruling party and government plan to hold a virtual asset meeting on the 13th as a follow-up measure to the ‘Luna-Terra incident’ to discuss and finalize industry self-regulation measures.

This decision comes from the judgment that despite the crash of the cryptocurrency Luna, coin exchanges set different delisting criteria, resulting in negligence in protecting virtual asset investors. Accordingly, the coin exchange industry intends to establish common delisting standards and regulate investor deposits and withdrawals.

On the 7th, Yoon Chang-hyun of the People Power Party told Asia Economy in a phone interview, "The coin exchange industry recently brought self-regulation measures at a private meeting," adding, "We will proceed with discussions centered on this and see if there are additional points to address." The self-regulation measures submitted by the industry include joint response plans such as delisting and suspension of trading by coin exchanges. The purpose is to create regulatory measures that exchanges can jointly respond to in emergencies to secure investor trust.

The industry’s joint regulatory plan was directly triggered by the ‘Luna-Terra incident.’ Despite the coin price crash, exchanges’ responses such as designating watchlists, suspending trading, and halting deposits and withdrawals varied, which was criticized for failing to prevent investor damage.

Representative Yoon said, "Although they are called exchanges, unlike securities exchanges, they operate independently," and added, "I believe a joint response plan that can gain the trust of general investors is necessary."

However, dissatisfaction is also detected throughout the virtual asset industry regarding these regulatory moves. A virtual asset exchange official said, "The party wants to create common listing review standards, but is it right for the ruling party and government to regulate by taking over the private sector?" Ostensibly, it takes the form of industry self-regulation, but there are concerns that the level of regulation demanded by the ruling party and government could shrink the virtual asset industry.

Separately, there are moves to propose statutory laws. Representative Yoon has introduced the ‘Basic Act on the Virtual Asset Industry,’ which implements a licensing system by the Financial Services Commission and establishes a Virtual Asset Industry Development Fund. Kim Byung-wook of the Democratic Party has introduced the ‘Act on the Development of the Virtual Asset Industry and Protection of Users,’ which includes registration systems for trading and custody management businesses and other virtual asset business reporting systems.

The ruling party and government are discussing the enactment of the ‘Digital Asset Basic Act,’ which was included in President Yoon Seok-yeol’s election pledges and national agenda, but plan to conduct comprehensive discussions including an alternative called the ‘Blockchain Platform Basic Act.’ The purpose is to reflect the need to supplement the technical aspects by using the term blockchain and to broadly discuss beyond virtual assets.