The ruling Democratic Party of South Korea has introduced the 'Digital Asset Basic Act', a proposed legislation aimed at establishing a robust legal framework for digital assets. This framework includes regulations for the issuance, trading, custody, and supervision of digital assets. According to the proposal, 'digital assets are emerging as a key medium connecting the real economy and financial markets.' It 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 introduction of this proposal follows stalled negotiations on the Digital Asset Basic Act earlier this year, which were hindered by disagreements between regulators over the issuance of won-pegged stablecoins. The Bank of Korea advocated for banks with 51% ownership to be the sole issuers of stablecoins, whereas the Financial Services Commission expressed concerns that this could stifle innovation. The proposed bill aims to 'establish a foundation for Korea to lead 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 also introduce licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services.
Furthermore, it would 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 suggests the creation of a digital asset committee to review and coordinate policy, as well as national basic and implementation plans for the sector. It highlights that South Korea's current system primarily focuses on investor protection and 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 mandates all domestic cryptocurrency exchanges to adopt a single, strict system for delaying withdrawals to combat voice phishing scams.