By
Tolu Ajiboye
April 23rd, 2024
The new code will protect investors by systemizing token listings and delisting.
Leading Korean exchanges have agreed to a new emergency code which will reduce investor loss should another Terra-styled collapse occur. The emergency system will launch within 24 hours of adverse market conditions. The agreement was the outcome of the legislative session held by the South Korean National Assembly on market fairness. Korea’s largest exchanges, Upbit, Bithumb, Coinone, Korbit, and Gopax, attended the session.
Implications of the New Code
The exchanges discussed the need for a new code of conduct during the legislative session. The new code will protect investors by systemizing token listings and delisting. It will prevent exchanges from allowing investors to trade under highly volatile conditions by shutting down trading in 24 hours or delisting the token. Consequently, this will improve regulatory compliance and reduce differences in listing guidelines between exchanges.
According to the agreement, a warning system that will help investors identify unusually high-risk virtual assets due to abnormal price changes will roll out by September. Later in October, a review of guidelines for listing and delisting tokens will happen.
Korean blockchain analyst, Jun Hyuk Ahn, believes the code will restore investor confidence in the crypto exchanges. “More transparency on listing and delisting processes will help bring back the trust lost from crypto traders through the Luna incident,” he noted.
New Code May Affect Korean Exchanges
Despite the agreement, this is a big ask for the exchanges that will likely lose in the long term. However, it is not a surprising decision. The exchanges came under scrutiny after the LUNA crash. Many also blame them for allowing more investors to trade LUNA while it crashed. Reports suggest that about 180,000 Koreans bought LUNA between May 6 and 18. LUNA eventually fell from $60 to $0.01, wiping out the life savings of many Koreans.
According to a report by News1, “Domestic exchanges often secure profits by listing altcoins that are not listed by competitors because altcoin trading volumes are quite high.” Thus, the new code will prevent exchanges from profiting from altcoin listings. Unfortunately, listing various altcoins is how many exchanges also raise funds.