The Democratic Party of South Korea has introduced a proposed 'Digital Asset Basic Act' aimed at establishing a legal framework for digital assets. This includes regulations for issuance, trading, custody, and supervision of digital assets. The proposal categorizes value-linked digital assets, such as those tied to fiat currencies or real assets, as requiring authorization from issuers, refund reserves, and redemption obligations.
This development comes after negotiations for the Digital Asset Basic Act stalled earlier in the year due to disagreements between regulators over the issuance of stablecoins pegged to the Korean won. The Bank of Korea advocated for banks with majority ownership to be the sole issuers of stablecoins, while the Financial Services Commission expressed concerns that this could stifle innovation. The proposed legislation seeks to create a foundation for South Korea to lead the global digital financial order by introducing licensing, registration, and reporting requirements for digital asset businesses.
It also outlines rules for disclosures, internal controls, and market conduct, including the prohibition of unfair trading practices. Furthermore, the proposal suggests the establishment of a digital asset committee to oversee policy and develop national plans for the sector. This move follows the announcement of new regulations by the Financial Services Commission and Financial Supervisory Service, mandating all domestic cryptocurrency exchanges to implement a uniform system for delaying withdrawals to combat voice phishing scams.