The Democratic Party of South Korea has proposed the 'Digital Asset Basic Act', which aims to establish a regulatory framework for digital assets. This includes rules for issuance, trading, custody, and supervision. The proposal defines digital assets linked to real-world value, such as fiat currencies, as requiring authorization from issuers, reserve funds, and redemption obligations.
This proposed legislation comes after stalled negotiations earlier in the year, where regulators disagreed on who should be allowed to issue stablecoins pegged to the Korean won. The Bank of Korea suggested that only banks with 51% ownership should be authorized to issue these stablecoins, while the Financial Services Commission warned that this could hinder innovation.
The new proposal seeks to create a foundation for South Korea to lead the global digital financial sector. To issue digital assets, entities must obtain approval and meet specific requirements, including capital thresholds, operational capacity, and reserve plans.
The legislation also introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, and advisory services. Furthermore, it establishes rules for disclosures, internal controls, and market conduct, prohibiting unfair trading practices such as market manipulation.
The proposal includes the creation of a digital asset committee to review and coordinate policy, as well as national plans for the sector. Currently, South Korea's system focuses on investor protection but lacks a comprehensive framework for issuance, disclosure, and market structure. This proposal follows the announcement of new rules by the Financial Services Commission and Financial Supervisory Service, requiring all domestic cryptocurrency exchanges to adopt a strict system for delaying withdrawals to prevent voice phishing scams.