South Korea to Launch 'Digital Assets Committee' in Response to Terra Implosion: Report

Following last month's Terra implosion, South Korean regulators are stepping up supervision measures for the fast-growing crypto industry.

2 min read

Jun 1, 2022

The South Korean government is launching a Digital Assets Committee to oversee crypto exchanges as early as next month, according to a translated report from local outlet NewsPim.

The Digital Assets Committee will be a larger, reorganized version of the Special Committee on Virtual Assets (SCVC) that was formed in the wake of the TerraForm Labs crash last month that saw the company's TerraUSD stablecoin and LUNA governance token lose billions in a matter of days.

"The launch of the Digital Assets Committee will be immediately after the inauguration of the new Financial Services Commission (FSC) Chairman," a government official told NewsPim.

The newly-elected South Korean President Yoon Suk-yeol has not yet named a nominee to replace FSC Chairman Koh Seungbeom but is expected to do so in the coming weeks. The Financial Services Commission (FSC) is the country's top finance regulator.

The Digital Assets Committee will make policy recommendations, including criteria for new cryptocurrencies to be listed on exchanges, a schedule for ICOs (initial coin offerings), and enforce investor protections ahead of the enactment of a Digital Asset Basic Act (DABA).

The DABA is a crypto policy package that President Suk-yeol is looking to introduce next year, along with a more permanent government crypto regulator.

South Korea and Crypto

Currently, the five major South Korean crypto exchanges—Upbit, Bithumb, Coinone, Korbit, and Gopax—have been cooperating to prevent another scenario like the Terra crash from happening again, according to yesterday's report.

But the growing amount of money transacting on the exchanges has led to growing pressure for the government to intervene.

"As of the end of last year, the daily transaction amount of virtual assets was 11.3 trillion won [$9.1 billion], which is similar to the daily transaction of the KOSDAQ," Hwang Seok-jin, a college professor and member of the SCVC, told NewsPim, "but there is no investor protection due to the lack of a system."

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