South Korea eyes listing rules for crypto exchanges after LUNA scandal

South Korean lawmakers are calling on the country’s crypto exchanges to formulate guidelines for listing and delisting cryptocurrencies, Bloomberg News reported.

The legislators are basing the urgency of establishing the new listing rules on the collapse of TerraUSD (UST) and its sister token, Terra LUNA (LUNA). By getting local exchanges to create clear guidelines, the policymakers hope to protect investors against the risks associated with the nascent asset class.

Yun Chang-Hyun, head of the ruling party’s Virtual Asset Committee, is championing the motion. In an interview, Chang-Hyun disclosed that he called for a second meeting with leading South Korean crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax. The meeting is scheduled for the week of June 13.

Per Chang-Hyun, the meeting’s goal is to get the exchanges to sign off on a draft of the non-binding guidelines. Once crypto exchanges reach a consensus, South Korea will implement a self-regulatory system like Japan.

Emphasizing the need for the listing and delisting guidelines, Chang-Hyun said crypto has multiple shortcomings compared to traditional finance. He added that the crypto space has been operating for a long time without order and discipline.

Increasing efforts to protect crypto investors

Previously, Chang-Hyun suggested that the South Korean parliament summon Terra’s CEO, Do Kwon, to answer questions about the collapse of UST and LUNA.

He said:

We should bring related exchange officials, including CEO Do Kwon of Terra, which has become a recent problem, to the National Assembly to hold a hearing on the cause of the situation and measures to protect investors.

Soon afterward, South Korean authorities probed Terraform Labs employees. The investigation sought to uncover whether internal players intentionally manipulated UST and LUNA prices. Moreover, authorities looked into whether the tokens followed the correct listing procedures on local exchanges.

While South Korea is still trying to find the best approach to protect investors without stifling the growth of the crypto ecosystem, Japan has taken a stricter stance.

Japan’s lawmakers passed a stablecoin regulation bill following the Terra fiasco to protect investors. The bill defines stablecoins as digital money. Additionally, the legislation requires stablecoin issuers to link their tokens to the yen or another legal tender.

The U.K. also proposed legislative amendments to regulate crypto companies, including stablecoin issuers. Specifically, the government wants to bring crypto firms under the Financial Market Infrastructure Special Administration Regime (FMI SAR).