South Korea's governing Democratic Party has introduced the 'Digital Asset Basic Act', a legislative proposal aimed at establishing a regulatory framework for digital assets. This includes guidelines for issuance, trading, custody, and supervision. The proposal 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.
The 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 seeks to create a foundation for South Korea to lead the global digital financial landscape.
To issue digital assets, entities must obtain approval, meet capital requirements, and demonstrate operational capacity and reserve plans. The bill also introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, and advisory services.
Furthermore, it establishes rules on disclosure, internal controls, and market conduct, prohibiting unfair trading practices. A digital asset committee would be formed to review and coordinate policy, alongside national plans for the sector. The current system is 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, mandating domestic cryptocurrency exchanges to adopt a unified system for delaying withdrawals to combat voice phishing scams.