South Korea's Democratic Party has proposed the 'Digital Asset Basic Act', a bill aimed at establishing a regulatory framework for digital assets, covering aspects such as issuance, trading, custody, and supervision. The proposal recognizes digital assets as a key link between the real economy and financial markets, and categorizes value-linked digital assets as those requiring issuer authorization, refund reserves, and redemption obligations. The proposed legislation comes after stalled negotiations on the Digital Asset Basic Act earlier this year, due to disagreements between regulators over the issuance of won-pegged stablecoins. The Bank of Korea had advocated for banks with 51% ownership to be the sole issuers of stablecoins, while the Financial Services Commission warned that this could stifle innovation.
The new proposal seeks to create a foundation for South Korea to lead the global digital financial order, and would introduce licensing, registration, and reporting requirements for digital asset businesses. It also outlines rules on disclosures, internal controls, and market conduct, including prohibitions on unfair trading practices.
A digital asset committee would be established to review and coordinate policy, and national basic and implementation plans for the sector would be created. The proposal acknowledges that South Korea's current system is focused on investor protection but lacks a comprehensive framework for issuance, disclosure, and market structure. This move follows the introduction of new rules by the Financial Services Commission and Financial Supervisory Service, requiring all domestic cryptocurrency exchanges to adopt a strict system for delaying withdrawals to combat voice phishing scams.