The Democratic Party of South Korea has introduced a proposed 'Digital Asset Basic Act' that aims to establish a robust legal framework for digital assets, encompassing their issuance, trading, custody, and supervision. The proposal acknowledges the growing significance of digital assets as a crucial link between the real economy and financial markets. It categorizes value-linked digital assets, such as those pegged to fiat currencies or real-world assets, as requiring authorization from issuers, reserve requirements, and redemption obligations. This development comes after stalled negotiations on the Digital Asset Basic Act earlier this year, sparked by disagreements between regulators over the issuance of stablecoins pegged to the Korean won.
The proposed legislation seeks to 'lay the groundwork for Korea to lead the global digital financial order' by introducing licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services. It also outlines rules for disclosures, internal controls, and market conduct, including the prohibition of unfair trading practices. Furthermore, the proposal calls for the establishment of a digital asset committee to oversee policy coordination and the development of national plans for the sector.
This move follows the introduction of new regulations 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.