South Korea mulls new statutory crypto body to take over DAXA functions

South Korean financial authorities are reviewing plans to establish a new incorporated association dedicated to virtual assets, potentially absorbing key functions from the Digital Asset eXchange Alliance (DAXA). The move, reported by Newsis, signals a regulatory shift as the country prepares for the second phase of its Digital Asset Basic Act.

Regulatory groundwork for a new crypto oversight body

According to Newsis, the plan involves creating a separate preparatory committee to launch the new entity. An official indicated that DAXA currently operates as an industry-level group without legal standing, prompting authorities to consider forming a new incorporated association rather than restructuring the existing alliance.

DAXA, established in 2023, is a self-regulatory body comprising major South Korean crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax. It has been instrumental in setting listing and delisting guidelines, but its lack of statutory authority has limited its enforcement power.

Implications for the Digital Asset Basic Act phase two

The proposed statutory body would likely gain legal recognition and clearer enforcement capabilities. This aligns with the government’s broader efforts to strengthen investor protections and market integrity as the second phase of the Digital Asset Basic Act moves through the National Assembly.

Phase one, which took effect in July 2024, focused on user protection and unfair trading practices. Phase two is expected to address market structure, licensing, and corporate participation, potentially reshaping how digital assets are regulated in South Korea.

Why this matters for the crypto industry

If approved, the new association could centralize oversight and reduce fragmentation in the self-regulatory landscape. Exchanges may face clearer compliance requirements, while investors could benefit from stronger safeguards. However, the transition may also create temporary uncertainty as DAXA’s functions are gradually absorbed.

Conclusion

South Korea’s consideration of a statutory crypto association marks a notable step toward formalizing digital asset oversight. While the proposal is still in its early stages, it reflects a broader trend of governments seeking more structured regulatory frameworks. Market participants should monitor legislative developments closely, as the outcome could influence the country’s crypto ecosystem for years to come.

FAQs

Q1: What is DAXA and why is it being restructured?
DAXA is a self-regulatory alliance of major South Korean crypto exchanges. It lacks legal status, limiting its enforcement power. Authorities are considering a new incorporated association with statutory authority to better regulate the market.

Q2: What is the Digital Asset Basic Act?
The Digital Asset Basic Act is South Korea’s comprehensive legal framework for digital assets. Phase one focused on user protection; phase two aims to address market structure and licensing, potentially incorporating the new statutory body.

Q3: How could this affect crypto exchanges and investors?
Exchanges may face clearer compliance rules and oversight, while investors could gain stronger protections. The transition may bring temporary uncertainty, but the long-term goal is a more stable and transparent market.