South Korea's governing Democratic Party has introduced the 'Digital Asset Basic Act', a proposed legislation aimed at establishing a robust framework for digital assets. The act encompasses issuance, trading, custody, and supervision of digital assets. It categorizes value-linked digital assets, such as those tied to fiat currencies or real-world assets, as requiring authorization from issuers, refund reserves, and redemption obligations.
This move comes after stalled negotiations on the Digital Asset Basic Act, which were hindered by disagreements between regulators over the issuance of won-pegged stablecoins. The proposed legislation aims to create a foundation for South Korea to assume a leading role in the global digital financial landscape. It introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services.
The proposal also outlines rules for disclosures, internal controls, and market conduct, including the prohibition of unfair trading practices. Additionally, it calls for the establishment of a digital asset committee to oversee policy coordination and the development of national plans for the sector. The current system in South Korea is primarily focused on investor protection but lacks a comprehensive framework for issuance, disclosure, and market structure.
This proposal follows the introduction of new rules by the Financial Services Commission and Financial Supervisory Service, requiring all domestic cryptocurrency exchanges to implement a unified system for delaying withdrawals to prevent voice phishing scams.