The Democratic Party of South Korea has proposed the 'Digital Asset Basic Act', which aims to establish a robust legal framework for digital assets, including their issuance, trading, custody, and supervision. The proposal recognizes the growing importance of digital assets in connecting the real economy and financial markets. It categorizes value-linked digital assets, such as those tied to fiat currencies or real-world assets, as requiring authorization from issuers, refund reserves, and redemption obligations. This move comes after 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 proposed legislation seeks to create a foundation for South Korea to lead the global digital financial order, with entities seeking to issue digital assets required to obtain approval and meet specific requirements, including capital thresholds and operational capacity. The bill also introduces licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services, as well as rules on disclosures, internal controls, and market conduct. A digital asset committee would be established to review and coordinate policy, along with national basic and implementation plans for the sector.
The current system in South Korea is focused on investor protection but lacks a comprehensive framework for issuance, disclosure, and market structure, which this proposal aims to address.