The Democratic Party of South Korea has introduced the 'Digital Asset Basic Act', a legislative proposal aimed at establishing a regulatory framework for digital assets, encompassing their issuance, trading, custody, and supervision. The proposal recognizes digital assets as a crucial link between the real economy and financial markets, and categorizes value-linked digital assets as those requiring authorization from issuers, refund reserves, and redemption obligations. This move comes after stalled negotiations on the Digital Asset Basic Act, which were hindered by disagreements between regulators over the issuance of stablecoins pegged to the Korean won.
The proposed legislation seeks to create a foundation for South Korea to assume a leading role in the global digital financial order, and would require entities seeking to issue digital assets to obtain approval and meet specific requirements, including capital thresholds and operational capacity. The bill also introduces licensing, registration, and reporting requirements for digital asset businesses, and establishes rules on disclosures, internal controls, and market conduct.
Furthermore, it proposes the creation of a digital asset committee to review and coordinate policy, as well as national plans for the sector. The current system in South Korea is primarily focused on investor protection, but lacks a comprehensive framework for issuance, disclosure, and market structure. This proposal follows the recent announcement by the Financial Services Commission and Financial Supervisory Service, which ordered domestic cryptocurrency exchanges to adopt a unified system for delaying withdrawals in an effort to combat voice phishing scams.