The Democratic Party of South Korea has introduced a proposed 'Digital Asset Basic Act' aimed at establishing a regulatory framework for digital assets. This includes provisions for their issuance, trading, custody, and supervision. The proposal defines a category of digital assets linked to real-world value, which would require authorization from issuers, refund reserves, and redemption obligations.
This development comes after stalled negotiations on the Digital Asset Basic Act earlier in the year, due to disagreements between regulators over the issuance of stablecoins pegged to the Korean won. The Bank of Korea advocated for banks with majority ownership to be the sole issuers of stablecoins, while the Financial Services Commission expressed concerns that this could stifle innovation.
The proposed legislation seeks to create a foundation for South Korea to take the lead in the global digital financial landscape. It outlines requirements for entities seeking to issue digital assets, including obtaining approval, meeting capital thresholds, and having operational capacity and reserve plans in place. The bill also introduces licensing, registration, and reporting requirements for digital asset businesses, including those involved in trading, brokerage, custody, and advisory services. Furthermore, it establishes rules on disclosure, internal controls, and market conduct, prohibiting unfair trading practices such as market manipulation.
The proposal suggests the creation of a digital asset committee to oversee policy and develop national plans for the sector. Currently, South Korea's regulatory system prioritizes 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 all domestic cryptocurrency exchanges to implement a unified system for delaying withdrawals to combat voice phishing scams.