South Korea’s ruling Democratic Party proposed a “Digital Asset Basic Act” Wednesday that would establish a legal framework for digital assets, including issuance, trading, custody and supervision.
“Digital assets are emerging as a core medium connecting the real economy and financial markets,” the proposal states. It defines value-linked digital assets, including those tied to fiat currencies or real-world assets, as a category requiring issuer authorization, refund reserves and redemption obligations.
The new proposal comes amid stalled Digital Asset Basic Act negotiations since early this year when regulators clashed over who should be allowed to issue won-pegged stablecoins. The Bank of Korea insisted banks with 51% ownership should be the only ones authorized to issue stablecoins, while the Financial Services Commission warned 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 would introduce licensing, registration and reporting requirements for digital asset businesses, including trading, brokerage, custody and advisory services.
It would also establish rules on disclosures, internal controls and market conduct, including prohibitions on unfair trading practices such as market manipulation and use of non-public information.
The proposal calls for the creation of a digital asset committee to review and coordinate policy, as well as national basic 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 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 withdrawals. The aim is to block a surge in voice phishing scams that rely on speed.