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South Korea to establish virtual assets watchdog in light of Terra collapse

South Korea has set out to form a Digital Asset Committee to oversee the virtual assets industry after the Terra collapse

By Shashank Bhardwaj

Image: Shutterstock

The collapse of the stablecoin–TerraUSD (UST) and its sister token–LUNA earlier in May caught the attention of the South Korean government on the urgency to set up a committee to decide on crypto regulation.

Until the country’s top policymakers draft a clear framework for digital assets, a Digital Asset Committee will act as a ‘control tower’ for the sector. This committee is set to launch in the last week of June.

It’s believed that this committee will bring together ministries to create a joint supervisory body after the swearing-in of the new Financial Services Commission Chair.

The ‘watchdog’ will supervise the industry and work closely with the top five crypto exchanges of South Korea (Upbit, Bithumb, Coinone, Cobit, and Gopax) to prevent another Terra-like collapse. It will also implement guidelines on listings, unfair trading, disclosure systems, and investor protection issues of digital assets.

Before the crash, Terra’s UST surpassed Binance’s BUSD as the third most popular stablecoin and grew by 865.81 percent in less than a year. The trouble for UST increased earlier last month when it lagged behind the United States dollar.

The Luna-Tera coins are now worthless and their value declined by 80 percent, wiping out more than $200 million from the ecosystem.

While the National Assembly has asked Do Kwon (the creator of Terra) to appear for the hearings over the sudden collapse, South Korea, the hotbed of crypto trading activities, has created a financial regulatory committee by the name ‘death’ to tighten the regulatory policies in response to the Terra crash.

South Korea is not the only country to call for swift crypto regulations. The Terra UST death spiral acted as a catalyst for legislators worldwide, including the United States and the United Kingdom, to pay more attention to stablecoins and other digital currencies.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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