South Korea's governing Democratic Party has introduced a proposed 'Digital Asset Basic Act' that seeks to establish a regulatory framework for digital assets, encompassing their issuance, trading, custody, and supervision. The proposal recognizes digital assets as a vital link between the real economy and financial markets.
It 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 proposal aims to create a foundation for South Korea to lead the global digital financial landscape. It introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services, and establishes rules on disclosures, internal controls, and market conduct. A digital asset committee would be formed to oversee policy and coordinate national plans for the sector.
The move comes as South Korea's current regulatory framework is deemed inadequate, focusing primarily on investor protection without a comprehensive structure for issuance, disclosure, and market organization.