On Wednesday, South Korea's governing Democratic Party unveiled a proposed 'Digital Asset Basic Act', aiming to establish a comprehensive legal framework for digital assets. This includes provisions for issuance, trading, custody, and supervision. The proposal acknowledges the growing importance of digital assets as a key link between 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, reserve requirements, and redemption obligations. The proposal seeks to create a foundation for Korea to lead the global digital financial order, with entities seeking to issue such assets needing to obtain approval and meet specific requirements, including capital thresholds and operational capacity. The legislation introduces licensing, registration, and reporting requirements for digital asset businesses and establishes rules on disclosures, internal controls, and market conduct.
A digital asset committee would be formed to review and coordinate policy, alongside national plans for the sector. The current system is focused on investor protection but lacks a comprehensive framework, prompting the need for this proposed legislation, which comes amid stalled negotiations and follows the introduction of new rules to combat voice phishing scams.