South Korea’s New Legislation on Digital Assets
In a significant move to regulate the burgeoning digital asset sector, South Korea is on track to finalize new legislation by January. This follows a breakthrough among lawmakers from both the ruling and opposition parties regarding the framework for stablecoins, which had seen protracted negotiations for several months.
Consensus on Stablecoin Framework
Key discussions were held privately, leading to a consensus on a consortium model where banks will retain a majority stake in the issuance of won-pegged stablecoins while also enabling participation from technology firms. This newly agreed structure is designed to align with the Bank of Korea’s objectives of maintaining monetary stability while simultaneously fostering innovation within the private sector.
It is expected to pave the way for what officials are calling a “Korean-style stablecoin,” which will include structured regulations regarding reserves and issuance protocols.
Legislative Timeline and Goals
Kang Joon-hyun, a prominent lawmaker from the Democratic Party, emphasized the necessity for the government to present its formal proposal by December 10. Should this deadline not be met, the legislative bodies have signaled their intention to develop and advance an alternative proposal independently. The goal is to have the bill approved during the extraordinary session of the National Assembly in January, pending coordination with the ruling People Power Party and the presidential office.
Building on Previous Legislation
This forthcoming act builds upon the Digital Asset Basic Act, which was enacted earlier in the year, establishing foundational licensing standards for issuers, protective measures for reserves, and compliance expectations for virtual asset service platforms. By treating digital assets comparably to traditional financial products, the new legislation aims to address critical gaps.
It particularly outlines clearer regulations for U.S.-originated stablecoins, a necessity as major international players like USDT and USDC gain market dominance.
Regulatory Urgency and Market Concerns
Regulators have noted the urgency of these developments, given the increasing adoption of cryptocurrencies among South Koreans, particularly those aged 20 to 50. Concerns have been voiced about potential stagnation of local companies in comparison to their counterparts in the U.S., European Union, and Japan, all of which are advancing their own stablecoin regulations in 2025.
Additional Legislative Topics
Additional legislative topics discussed included enhancing financial security and ensuring market transparency. A revision of the Electronic Financial Transactions Act is under consideration, particularly in light of various cyberattacks on prominent financial institutions. These revisions aim to introduce tougher penalties and improve enforcement post-incident.
Meanwhile, the government is also collaborating with opposition groups to initiate reforms in the capital markets, proposing mandatory tender offers in specific corporate scenarios and adjusting share allocation rules to ensure fair access for everyday investors.
