Daksah and Coin Delisting to Establish Joint Guidelines... "Voluntary Regulation to Prevent Investment Damage"

Common Standards Established for Delisting Following Listing
Introduction and Utilization of Joint Crisis Response System

Controversy Over Collusion in WEMIX Delisting Incident
Claims of "Not Unfair Trading Practices"

[Asia Economy Reporter Lee Jung-yoon] The Digital Asset Exchange Joint Council (DAXA), composed of domestic virtual asset exchanges operating KRW markets such as Upbit, Bithumb, Coinone, Korbit, and Gopax, is preparing common standards for the termination of trading support (delisting).

At the 'Digital Asset Self-Regulation Status and Policy Tasks Symposium' hosted by DAXA and the Korea Economic Law Society on the 12th, Kim Jae-jin, Secretary General of DAXA, stated, "The decision on whether to terminate trading support is the role of the trading operators," adding, "We are in discussions to establish minimum common standards."

Secretary General Kim also explained, "Like a common guide for trading support, it will serve as a self-regulatory mechanism to prevent unhealthy assets that do not even meet minimum requirements from circulating and causing investor damage, without restricting individual competitiveness."

DAXA has prepared and is applying trading support guidelines composed of inherent risks, technical risks, business risks, and other risks. The inherent risk category assesses whether an asset is fraudulent, while other risks evaluate accessibility to information about virtual assets.

DAXA has also introduced and is utilizing a joint crisis response system. Through joint crisis response, DAXA designated Wemade's issued virtual asset WEMIX as a cautionary and watch-listed item and terminated its trading support. Additionally, it urged caution for FTT, the self-issued coin of the global exchange FTX that went bankrupt due to liquidity crisis, designated termination of trading support, and announced this. Furthermore, DAXA has previously designated Litecoin as a cautionary and watch-listed item and terminated its trading support, as well as suspended deposits and withdrawals in preparation for the Ethereum Merge upgrade.

DAXA inserts warning phrases in investments and advertisements and provides investor protection education. It has also introduced periodic risk assessments, developing risk indicators by virtual asset type and specifying monitoring methods. In particular, for stablecoins designed to be pegged to fiat currency, if the price linked to 1 dollar reaches 0.9 dollars and maintains or falls below that level for 24 hours, it is designated as a cautionary item within 12 hours. The same measures are taken if the price falls to 0.8 dollars. A virtual asset alert system is being developed to notify of sudden changes in price, trading volume, deposit volume, and other factors.

Photo provided by Digital Asset Exchange Joint Council (DAXA)

Secretary General Kim said, "Since its launch, DAXA has continuously sought and implemented ways for all member companies to work together for market self-purification and investor protection," adding, "As we have taken the first step toward implementing self-regulation within the digital asset ecosystem, we will supplement shortcomings and seek improvements."

Meanwhile, at the symposium, it was argued that DAXA's discussion of delisting does not constitute unfair trade practices.

Kim Gap-rae, Senior Research Fellow at the Capital Market Research Institute, said, "It is important to consider whether the act of virtual asset exchanges discussing delisting through a council constitutes an unfair joint act," adding, "It is a public interest act to expel virtual assets that do not meet listing standards for investor protection."

He continued, "The significant public interest is shown by the fact that official actions are taken while foregoing fee revenue," emphasizing, "Considering the Fair Trade Act, it is difficult to support the claim that delisting discussions through a council of exchanges constitute collusion without proof of unfairness."

Last November, DAXA decided to delist Wemade's issued virtual asset WEMIX due to a significant violation of circulation volume, inadequate or incorrect information provided to investors, errors in materials submitted during the explanation period, and damage to trust.

At that time, there was controversy over collusion regarding this decision. Former KB Kookmin Bank President Lee Geon-ho stated from an economic rather than legal perspective, "DAXA is a council of the five major domestic virtual asset exchanges allowed to trade in KRW. Although DAXA members present themselves as grand exchanges, they are actually private businesses mediating virtual asset trading for profit."

He added, "DAXA does not have the authority to sanction Wemade, the issuer of WEMIX," and said, "The measures that could be taken were to request correction and recurrence prevention from Wemade and, if illegal acts occurred, to report or sue to supervisory and investigative authorities. Individual members should have limited themselves to restricting WEMIX trading or terminating trading support based on their own judgment."