The Democratic Party of South Korea has proposed the 'Digital Asset Basic Act', which aims to establish a robust legal framework for digital assets. This includes guidelines for issuance, trading, custody, and supervision. The proposal emphasizes the growing importance of digital assets in connecting the real economy and financial markets.
It categorizes value-linked digital assets, such as those tied to fiat currencies or real assets, as requiring authorization from issuers, reserve requirements, and redemption obligations. The proposal seeks to resolve stalled negotiations on the Digital Asset Basic Act, which were hindered by disagreements over who should be allowed to issue stablecoins pegged to the Korean won. The Bank of Korea advocated for banks with a 51% ownership stake to be the sole issuers of stablecoins, while the Financial Services Commission expressed concerns that this could stifle innovation. The proposed legislation aims to create a foundation for South Korea to lead the global digital financial order.
To achieve this, entities seeking to issue digital assets must obtain approval and meet specific requirements, including capital thresholds, operational capacity, and reserve plans. The bill introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services.
It also establishes rules on disclosure, internal controls, and market conduct, including prohibitions on unfair trading practices such as market manipulation and the use of non-public information. Furthermore, the proposal calls for the creation of a digital asset committee to review and coordinate policy, as well as national basic and implementation plans for the sector. The current system in South Korea is focused on investor protection but lacks a comprehensive framework covering issuance, disclosure, and market structure. This proposal follows the announcement of new rules by the Financial Services Commission and Financial Supervisory Service, which mandate all domestic cryptocurrency exchanges to adopt a unified system for delaying withdrawals to combat voice phishing scams.