Korean Exchanges Agreed On A New Emergency System To Prevent Any Crypto Collapses Like Terra

Korean Exchanges Agreed On A New Emergency System To Prevent Any Crypto Collapses Like Terra

Korea’s major stock exchanges have agreed to develop a new emergency mechanism that will activate within 24 hours if another Terra-style crash threatens to occur.

Exchanges will gather under the new method to respond to sudden unfavorable market consequences, such as what happened with Terra in May.

According to a source from local news outlet Daily Sports, the agreement occurred after five of the country’s top crypto exchanges, Upbit, Bithumb, Coinone, Korbit, and Gopax, attended a session at the National Assembly, South Korea’s legislature, on Monday to discuss market fairness.

Exchange officials, members of the National Assembly, and Chairman Lee Bok-hyeon of the Financial Supervisory Services reviewed components of a new code of behavior that exchanges would voluntarily follow to safeguard investors.

In September, the new code will also see the launch of a warning system to alert investors of especially high-risk virtual assets owing to extraordinary price movements or other unusual activities.

The Terra ecosystem’s demise in May resulted in tens of billions of dollars in damages and a storm of legal issues for Do Kwon, the company’s creator, who was discovered to have evaded roughly $40 million in taxes through Terraform Labs.

To enhance regulatory compliance and remove differences in listing criteria between exchanges, the code tries to standardize token listings and delistings.

Investors have blamed domestic exchanges for allowing them to trade Terra (LUNA) as it plummeted. Between May 6 and May 18, the number of Korean LUNA holders increased by 180 percent, from 100,000 to almost 280,000. The Terra USD (UST) stablecoin had de-pegged over that period, and LUNA had fallen from nearly $60 to around $0.01.

The new restrictions aim to prohibit exchanges from enabling investors to trade such extremely volatile tokens by shutting off trading or delisting them completely within 24 hours.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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