South Korea mulls new crypto oversight committee after Terra scandal

The new committee will seek to improve protection for digital asset investors

Terra Luna                                 
Terra founder Do Kwon faces regulatory scrutiny – Photo: Shutterstock
                                

The collapse of Terra, which saw $40bn in value wiped within days and has weighed heavily on the wider crypto asset market, has reportedly prompted South Korea to establish a new regulatory oversight committee. 

New committee

According to South Korean news outlet NewsPim, the ruling Democratic Party announced its intention to launch a new Digital Asset Committee in early June. The body will serve as a watchdog over the nation’s crypto asset sector until the upcoming Framework Act for Digital Assets is passed into law and a formal government entity is created. 

Although a body already exists, the new committee will expand and streamline the government’s capacity to oversee the burgeoning industry. 

Dongguk University’s Professor Hwang Seok-jin, who also serves as a member of the Special Committee on Virtual Assets, stated: 

“As of the end of last year, the daily transaction amount of virtual assets was 11.3 trillion won, which is similar to the average daily transaction of the KOSDAQ, but there is no investor protection due to the lack of a system." 

He added that digital asset investors should ultimately have the same level of protection that is currently enjoyed by equity investors. 

In addition to investor protection, the new committee will develop guidelines for screening criteria, unfair trade monitoring, disclosure systems and market monitoring. 

Do Kwon

Terra founder and CEO Do Kwon launched Terra 2.0 at the end of last week. After briefly reaching a high of $19.54, the cryptocurrency sank as low as $3.63 within its first day of trading. At noon on Wednesday, it stood at $7.28 with a market capitalisation of $1.5bn. 

Kwon, who is Korean, was summoned by the National Assembly of Korea’s Political Affairs Committee in the aftermath of the collapse. He also faces investigation by the so-called ‘Grim Reapers of Yeouido’, Korea’s special investigative and prosecutorial financial wrongdoing unit.

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