South Korea's ruling party has introduced the 'Digital Asset Basic Act', a legislative proposal aimed at establishing a regulatory framework for digital assets. This framework encompasses issuance, trading, custody, and supervision, recognizing digital assets as a crucial link between the real economy and financial markets. The proposal categorizes value-linked digital assets, including those pegged to fiat currencies or real-world assets, as requiring authorization from issuers, reserve requirements, and redemption obligations.
The move comes after stalled negotiations on the Digital Asset Basic Act, which were hindered by disagreements over the issuance of stablecoins pegged to the Korean won. The proposed 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.
It also introduces licensing, registration, and reporting requirements for digital asset businesses, as well as rules on disclosure, internal controls, and market conduct. A digital asset committee is proposed to review and coordinate policy, alongside national basic and implementation plans for the sector.
The current system is criticized for its focus on investor protection, lacking 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.