South Korea’s ruling Democratic Party on Wednesday proposed a “Digital Assets Basic Law” that would establish a legal framework for digital assets, including issuance, trading, custody and monitoring.
“Digital assets are emerging as an essential means connecting 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 requiring issuer authorization, redemption reserves, and repurchase obligations.
The new proposal comes as negotiations on the Digital Assets Basic Law have stalled since earlier this year, when regulators clashed over who should be allowed to issue won-pegged stablecoins. The Bank of Korea has insisted that banks with a 51% stake should be the only ones allowed to issue stablecoins, while the Financial Services Commission has warned that this could hamper innovation.
The bill also states that it aims to “establish a foundation for Korea to lead the global digital financial order.” Under the proposal, entities wishing to issue such assets must obtain approval and meet requirements such as 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 prohibiting unfair trade practices such as market manipulation and use of nonpublic information.
The proposal calls for the creation of a digital assets committee to review and coordinate policy, as well as national baseline and implementation plans for the sector.
He 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 by the country’s Financial Services Commission and Financial Supervisory Service on Wednesday, 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.
