KAVA and WAVES, two cryptocurrencies linked to stablecoins been removed from the South Korean exchanges’ warning list, and their deposit services have been restored.
DAXA, a self-regulatory organization for South Korean exchanges, designated KAVA and WAVES as warning items due to their unstable stablecoins USDX and USDN.
However, the exchanges have resolved the risk indicators for KAVA and WAVES, and they have lifted the warnings.
Stablecoins are digital tokens that aim to maintain a stable value by being pegged to another asset, such as the US dollar. These two cryptocurrencies are associated with stablecoins.
KAVA is the native token of the Kava platform, which allows users to borrow and lend stablecoins called USDX. WAVES is the native token of the Waves platform, which enables users to create and trade stablecoins called USDN.
The basis for their warning classification
In November 2021, the Digital Asset Exchange Association (DAXA), a self-regulatory organization of South Korean exchanges, designated KAVA as a cautionary item after discovering that USDX did not have a normal link to 1 dollar.
In December 2021, DAXA did the same for WAVES for a similar reason.
DAXA is a group of 20 exchanges that have agreed to follow certain rules and standards for trading virtual assets in South Korea.
DAXA monitors the risk indicators for each virtual asset type and takes measures such as advocating investment caution, designating caution or warning items, and terminating transaction support.
Among the risk indicators for stablecoins and stablecoin-related assets, DAXA designates a warning item when the ratio of stablecoin collateral of linked assets is less than 10% of the total collateral amount.
Methods of Resolution
According to Upbit, South Korea’s biggest crypto exchange, the risk indicators for KAVA and WAVES have been resolved, and their status as warning items by DAXA has been removed.
Upbit announced on January 20 that KAVA and WAVES deposit services have resumed.
However, Upbit also warned that KAVA and WAVES could be reclassified as warning items or face transaction termination depending on whether they meet the criteria for a stablecoin and stablecoin-related asset risk indicators in the future.
The Waves ecosystem faced difficulties when USDN, formerly known as a “stablecoin,” saw a significant decline in value. Sasha Ivanov, the founder of Waves, issued a statement clarifying USDN’s future.
He admitted that USDN had failed as a stable currency but emphasized that it was not “dead.” Additionally, he emphasized the withdrawal of Waves tokens from centralized exchanges and specified that the airdrop of Power tokens would exclusively take place on the Waves chain.
