South Korea's Democratic Party has introduced the 'Digital Asset Basic Act', a proposal that aims to establish a robust legal framework for digital assets. This includes regulations on issuance, trading, custody, and supervision, with a particular emphasis on value-linked digital assets. The proposal defines these assets as requiring authorization from issuers, refund reserves, and redemption obligations. The new legislation seeks to create a foundation for South Korea to lead the global digital financial order, with requirements for entities seeking to issue digital assets, including approval, capital thresholds, operational capacity, and reserve plans.
The bill also introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services. Furthermore, it establishes rules on disclosures, internal controls, and market conduct, prohibiting unfair trading practices. A digital asset committee would be created to review and coordinate policy, along with national plans for the sector. The current system is focused on investor protection but lacks a comprehensive framework, which this proposal aims to address.
This comes as the Financial Services Commission and Financial Supervisory Service have announced new rules for domestic cryptocurrency exchanges to adopt a strict system for delaying withdrawals, in an effort to combat voice phishing scams.