The Democratic Party of South Korea has introduced a proposed 'Digital Asset Basic Act' that aims to create a regulatory framework for digital assets, encompassing their issuance, trading, custody, and supervision. The proposal emphasizes that digital assets are becoming a crucial 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, refund reserves, and redemption obligations.
This proposal emerges amidst stalled negotiations on the Digital Asset Basic Act, which were hindered by disagreements between regulators over the issuance of won-pegged stablecoins. The Bank of Korea advocated for banks with 51% ownership to be the sole authorized issuers of stablecoins, while the Financial Services Commission warned that this could stifle innovation.
The proposed bill seeks to 'establish a foundation for Korea to lead the global digital financial order.' To issue such assets, entities must obtain approval and fulfill requirements, including capital thresholds, operational capacity, and reserve plans. The legislation would also introduce licensing, registration, and reporting requirements for digital asset businesses, including trading, brokerage, custody, and advisory services. Furthermore, it would establish rules on disclosures, internal controls, and market conduct, prohibiting unfair trading practices such as market manipulation and the use of non-public information. The proposal suggests the creation of a digital asset committee to review and coordinate policy, as well as national basic and implementation plans for the sector.
It acknowledges that South Korea's current system is focused on investor protection but lacks a comprehensive framework covering issuance, disclosure, and market structure. This proposal follows the announcement of new rules by the Financial Services Commission and Financial Supervisory Service, requiring all domestic cryptocurrency exchanges to implement a unified, strict system for delaying withdrawals to combat voice phishing scams.