[Executive Summary]

• The five major exchanges in Korea that operate the KRW market (Upbit, Bithumb, Coinone, Korbit, and Gopax) have launched a joint consultative group called the DAXA with the purpose of preventing the next Terra incident. The DAXA has decided to collaborate on agendas such as preparing an enhanced regulation for protecting virtual assets investors and planning a joint response plan for crisis management.

The five major exchanges in Korea that operate the KRW market (Upbit, Bithumb, Coinone, Korbit, and Gopax) have launched a joint consultative group with the purpose of preventing the next Terra incident.

The five exchanges announced on June 22nd that they have launched the “Digital Asset eXchange Alliance (DAXA)” and signed a new Memorandum of Understanding (MOU). The launch of DAXA is the first step in executing the “Joint VASP Self-Regulation Improvement Plan” that the five exchanges announced on June 13th at the “Second Government-Ruling Party Discussion on Virtual Assets.”

On the MOU, the DAXA decided to collaborate on the following agendas: 1) To prepare an enhanced regulation for protecting virtual assets investors from the beginning to the end, 2) To plan a joint response plan for crisis management, 3) To provide sufficient information to investors and raise awareness on the risks of investment, 4) To support and examine the enactment of ‘Digital Asset Basic Act’, and 5) To establish a common guideline for listing and delisting virtual assets.

“We are going to come up with an inter-exchange joint response plan for big crises that can pose big threats to the virtual asset industry such as the Terra incident,” the DAXA explained.

Lee Seok-woo, the CEO of Upbit has been elected as the first president of the DAXA. The term for the president of the DAXA is one year. “The 5 exchanges have organized this group for now, for a healthy development of the virtual assets industry and to come up with some protection measures for investors. The DAXA will open its door to other exchanges as well in the future” said Lee Seok-woo.

The launch of the DAXA brings greater protection for the investors and stronger measures for the market participants to prevent another LUNA incident from arising. Such steps aim to stimulate and reinvigorate market activities with improved trust and safety.  However, they may also cause turbulence in the industry as the DAXA plans to establish a guideline for listing new and delisting already existing virtual assets. It is recommended for investors and related businesses to continuously observe and analyze the trajectory of the issue and take precautions accordingly when investing in or entering the virtual asset market.