South Korea Weighs New Statutory Crypto Association, Tapping Some DAXA Functions

South Korea’s financial authorities are considering establishing a separate statutory association to handle public self-regulation of the virtual asset market.

Newsis reported on Aug. 31 that the authorities are closely reviewing a plan to set up an incorporated association for the crypto industry as part of second-phase legislative discussions on the Digital Asset Basic Act. Rather than converting the Digital Asset eXchange Alliance, or DAXA, into a statutory body, the proposal calls for creating a separate legal entity.

Discussion over giving a legal basis to a crypto self-regulatory organization has centered on the National Assembly. Bills introduced by Min Byung-deok of the Democratic Party also include a plan to establish a statutory association.

DAXA was launched in 2022 after the Terra-Luna collapse, led by South Korea’s major won-denominated exchanges. It has built an industry self-regulatory framework through joint listing guidelines and delisting standards.

Financial authorities are reviewing the separate incorporated-association model because DAXA is currently a consultative body formed voluntarily by the industry. One option under discussion is to create a preparatory committee to oversee the launch process, including drafting bylaws, building the organization, setting self-regulatory rules and staffing the group.

Authorities are also considering ways to use or link DAXA’s self-regulatory systems, operating experience and specialized personnel accumulated over the past four years in the process of creating the new association.

A financial authorities official told Newsis that DAXA does not currently have corporate legal status. The authorities are therefore envisioning a new incorporated association instead of simply converting the existing organization.

If launched, the statutory association could take on market self-regulation, including setting standards for crypto listings, distribution and disclosures, monitoring suspicious and unfair trading, and mediating disputes among exchanges. The structure would resemble the Korea Financial Investment Association under the Capital Markets Act, which performs certain public functions under a legal mandate.

The timing of the association’s launch and the scope of its authority have not been finalized. As second-phase legislative discussions on the Digital Asset Basic Act continue, the details of its structure and responsibilities are expected to be worked out in the National Assembly.