The Democratic Party of South Korea has proposed the 'Digital Asset Basic Act', aiming to establish a clear legal framework for digital assets. This includes rules for issuance, trading, custody, and supervision. The proposal acknowledges the growing importance of digital assets in connecting the real economy and financial markets, categorizing value-linked digital assets as those requiring authorization from issuers, reserve requirements, and redemption obligations. The proposal comes after stalled negotiations on the Digital Asset Basic Act earlier in the year, due to disagreements over the issuance of stablecoins pegged to the won.
The Bank of Korea advocated for banks with majority ownership to be the sole issuers, while the Financial Services Commission warned this could stifle innovation. The proposed legislation seeks to create a foundation for South Korea to lead the global digital financial landscape, requiring entities to obtain approval and meet specific requirements such as capital thresholds and operational capacity to issue digital assets. It introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, and advisory services.
The legislation also aims to establish rules on disclosure, internal controls, and market conduct, prohibiting unfair trading practices. Furthermore, it proposes the creation of a digital asset committee to review and coordinate policy, along with national plans for the sector.
This move 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.