South Korean authorities conduct ’emergency’ crypto exchange inspections following the collapse of Terra

Authorities in South Korea have reportedly begun an emergency assessment of domestic crypto exchanges.

According to Yonhap, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have launched “emergency” inspections into local crypto exchanges.

This move is likely associated with the recent collapse of TerraUSD (UST) and its governance token LUNA and is intended to ensure investor protection.

Emergency inspections

On Tuesday, a Korean news outlet reported that regulators had started investigating local crypto exchanges in the wake of the UST collapse, citing anonymous sources.
According to local news outlet Newspim, a representative from South Korea’s ruling People Power Party has called for a parliamentary hearing on TerraUSD (UST) after the stablecoin’s abrupt collapse last week.

Fork proposal and governance

Despite the crisis, Terraform Labs hopes to regain public confidence after the collapse. Kwan announced Monday that Terra was ‘more than UST’ and that he was proposing forking the network. The proposal will be voted on by Terra’s governance on May 18.

10/ Call to action: we encourage Terra developers to signal support & commit to build on the fork on public channels ASAP.

— Do Kwon 🌕 (@stablekwon) May 16, 2022

The latest developments regarding Terra may lead to a faster implementation of South Korea’s “Digital Asset Basic Act,” which is expected to be approved in 2023.

It is expected that upcoming legislation will include provisions for a 20% tax on digital assets and insurance for users.