The Democratic Party of South Korea has introduced a proposed 'Digital Asset Basic Act' aimed at establishing a regulatory framework for digital assets, covering aspects such as issuance, trading, custody, and supervision. This move recognizes the growing importance of digital assets as a key 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 introduction of this proposal follows 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 aims to create a foundation for South Korea to assume a leading role in the global digital financial order, with requirements for entities seeking to issue digital assets to obtain approval and meet specific criteria, including capital thresholds and operational capacity. The bill also proposes the introduction of licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, and advisory services, as well as rules governing disclosure, internal controls, and market conduct.
Furthermore, it suggests the establishment of a digital asset committee to oversee policy coordination and the development of national plans for the sector. This move is part of a broader effort to address the current lack of a comprehensive framework for digital assets in South Korea, which has primarily focused on investor protection.
The proposal coincides with the announcement of new rules by the Financial Services Commission and Financial Supervisory Service, mandating domestic cryptocurrency exchanges to implement a unified system for delaying withdrawals in order to combat voice phishing scams.