The Democratic Party of South Korea has proposed the 'Digital Asset Basic Act', which aims to establish a legal framework for digital assets, covering aspects such as issuance, trading, custody, and supervision. The proposal recognizes digital assets as a crucial medium connecting the real economy and financial markets, and categorizes value-linked digital assets as those requiring authorization from issuers, refund reserves, and redemption obligations. This move comes after stalled negotiations on the Digital Asset Basic Act earlier in the 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 requirements for entities seeking to issue digital assets, including approval, capital thresholds, operational capacity, and reserve plans. The bill also proposes licensing, registration, and reporting requirements for digital asset businesses, such as trading, brokerage, custody, and advisory services, as well as rules on disclosures, internal controls, and market conduct. Furthermore, it calls for the establishment of a digital asset committee to review and coordinate policy, and the creation of 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. This development follows the introduction of new rules by the Financial Services Commission and Financial Supervisory Service, requiring all domestic cryptocurrency exchanges to implement a strict system for delaying withdrawals to combat voice phishing scams.