South Korea's governing Democratic Party has put forth a 'Digital Asset Basic Act' proposal, aiming to establish a robust legal framework for digital assets. This includes provisions for issuance, trading, custody, and supervision. The proposal acknowledges digital assets as a vital link between the real economy and financial markets, defining value-linked digital assets as those requiring authorization from issuers, refund reserves, and redemption obligations.
Amid stalled negotiations over the Digital Asset Basic Act, the new proposal addresses concerns over the issuance of stablecoins pegged to the won. The Bank of Korea previously advocated for banks with majority ownership to be the sole issuers of stablecoins, while the Financial Services Commission warned this could stifle innovation.
The proposed legislation seeks to create a foundation for South Korea to lead the global digital financial order by introducing licensing, registration, and reporting requirements for digital asset businesses. It also outlines rules for disclosures, internal controls, and market conduct, including prohibitions on unfair trading practices. A digital asset committee would be established to review and coordinate policy, alongside national plans for the sector. The current system, focused on investor protection, lacks a comprehensive framework, prompting the need for this proposal.
This development follows the introduction of new rules by the Financial Services Commission and Financial Supervisory Service, mandating a unified, strict system for delaying withdrawals to combat voice phishing scams.