South Korea’s Digital Asset Basic Act
In a significant legislative move, South Korea’s ruling Democratic Party has completed the draft for its long-anticipated Digital Asset Basic Act. This new framework is set to impose stricter regulations on stablecoin issuers by introducing a legal capital requirement of 5 billion won (approximately $5 million). The initiative reflects South Korea’s commitment to becoming a key player in the crypto market rather than pushing it away, as reported by ChosunBiz.
Legislative Timeline and Objectives
As lawmakers prepare to submit the bill within the next month, they are racing to ensure its discussion occurs before the Lunar New Year, a pivotal time for political activity in the country. This legislation aims to establish clear guidelines for stablecoins, tokenized assets, and related services amid ongoing debates between the Financial Services Commission (FSC) and the Bank of Korea about the regulation of privately issued digital currencies.
Insights from the Digital Asset Task Force
Lee Jeong-mun, chair of the digital asset task force, emphasized the importance of moving beyond bureaucratic disagreements to a cohesive policy approach. Following the latest meeting, he expressed optimism about coordinating strategies between the party’s policy committee and the government to address outstanding regulatory issues.
Notably, while several contentious topics regarding major shareholder restrictions in digital asset companies have reportedly been settled, tensions between the FSC and the Bank of Korea regarding oversight of stablecoins persist.
Broader Embrace of Digital Finance
As part of a broader embrace of digital finance, the draft law comes on the heels of South Korea’s decision earlier this month to permit cryptocurrency exchange-traded funds (ETFs), including those backed by Bitcoin, starting in 2026. Additionally, the country is now permitting financial institutions to apply for licenses to facilitate these new investment products. Furthermore, amendments to the Capital Markets Act allow for the issuance of tokenized securities, enabling traditional asset representations on the blockchain.
Policy Shifts in Venture Capital
In an important shift in policy, South Korea has lifted previous restrictions that barred venture capital investments in cryptocurrency firms. This combination of regulatory updates, including the recently cemented Digital Asset Basic Act, underscores the government’s aim to cultivate a more favorable environment for the burgeoning cryptocurrency sector.
