South Korea’s ruling Democratic Party proposed a “Digital Asset Basic Act” on Wednesday that would establish a legal framework for digital assets, including issuance, trading, custody and supervision.
“Digital assets are emerging as a core medium that connects the real economy and financial markets,” the proposal states. It defines value-linked digital assets, including those linked to fiat currencies or real-world assets, as a category that requires issuer authorization, repayment reserves and redemption obligations.
The new proposal comes amid deadlocked negotiations over the Digital Asset Basic Act since the beginning of this year, with regulators clashing over who should be allowed to issue won stablecoins. The Bank of Korea insisted that banks with 51% ownership should be the only ones allowed to issue stablecoins, while the Financial Services Commission warned that this could hinder innovation.
The bill also said it aims to “establish a foundation for Korea to lead the global digital financial order.” Under the proposal, entities seeking to issue such assets must obtain approval and meet requirements, including capital thresholds, operational capacity and reserve plans.
The legislation will introduce licensing, registration and reporting requirements for companies with digital assets, including trading, brokerage, custody and consultancy.
It will also set out rules on disclosure, internal controls and market conduct, including prohibitions on unfair trading practices such as market manipulation and the use of non-public information.
The proposal calls for a digital assets committee to be established to review and coordinate policy as well as national master and implementation plans for the sector.
It also noted that South Korea’s current system remains focused on investor protection and lacks a comprehensive framework covering issuance, disclosure and market structure.
The proposal follows the announcement of new rules on Wednesday by the country’s Financial Services Commission and Financial Supervisory Service ordering all domestic cryptocurrency exchanges to adopt a single, strict system for delaying payouts. The goal is to block an increase in speed-dependent voice phishing scams.
