The Democratic Party of South Korea has introduced a proposed 'Digital Asset Basic Act' that seeks to establish a comprehensive legal framework for digital assets. This includes regulations for issuance, trading, custody, and supervision of digital assets. According to the proposal, 'digital assets are becoming a crucial link between the real economy and financial markets.' The proposal categorizes value-linked digital assets, including those tied to fiat currencies or real-world assets, as requiring authorization from issuers, refund reserves, and redemption obligations.
The proposal aims to 'lay the groundwork for Korea to take the lead in the global digital financial order.' To issue digital assets, entities must obtain approval and meet specific requirements, including capital thresholds, operational capacity, and reserve plans. The legislation would introduce licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services. It would also establish rules on disclosures, internal controls, and market conduct, including prohibitions on unfair trading practices such as market manipulation and the use of non-public information. 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 requires all domestic cryptocurrency exchanges to adopt a unified system for delaying withdrawals to prevent voice phishing scams.