In a bid to establish a more organized framework for the cryptocurrency landscape, a South Korean legislator has proposed an influential bill aimed at enhancing the regulatory atmosphere for digital assets. This new initiative, referred to as the Digital Asset Basic Act, was unveiled recently by Min Byeong-deok, a prominent member of the ruling Democratic Party.
This legislation aims to fortify the existing Virtual Asset Investor Protection Act, effective since July 2024, by extending its focus from mere investor protection to a more comprehensive legal framework governing digital assets.
Positioning South Korea on the Global Stage
During the announcement, Min emphasized that the bill represents a strategic move towards establishing South Korea as a frontrunner in the international digital economy. A significant component of the bill is the establishment of a licensing regime specifically for stablecoin issuers.
Under this proposed legislation, entities issuing stablecoins will be obligated to maintain a minimum capital of 500 million Korean won (roughly $367,890). This stipulation is aimed at ensuring fiscal responsibility while fostering the government’s objective to encourage stablecoins tied to the South Korean won.
This licensing framework resonates with President Lee Jae-myung’s initiative to enhance the domestic stablecoin market and mitigate capital outflow attributed to foreign-based stablecoins.
Min, who was instrumental in guiding the digital asset committee during the electoral campaign for President Lee, highlighted that the legislation seeks to strengthen the local digital financial infrastructure while deterring capital flight.
South Korea’s legislative efforts follow a global trend, with similar initiatives emerging in various jurisdictions. For instance, the Genius Act in the United States is making headway under the support of President Donald Trump, and Hong Kong has also introduced its own licensing protocols for stablecoin operations.
Min drew attention to globally recognized regulatory practices, referencing frameworks in the US, European Union, and Japan concerning the issuance, management, and trading of digital assets.
Comprehensive Regulatory Oversight
The Digital Asset Basic Act goes beyond just stablecoins; it aims to clarify the categorization of digital assets along with delineating the obligations of service providers within the ecosystem.
This legislation proposes the establishment of a Digital Asset Committee, which would operate under the direct supervision of the Office of the President, thus ensuring cohesive governance.
Furthermore, the proposed bill outlines legal mechanisms to tackle market abuses, such as penalties targeting manipulative trading practices or the spread of misinformation, which were not adequately covered by earlier regulations.
Additionally, the act includes protocols for standardizing compliance measures for exchanges and custodians. Should it be enacted, the Digital Asset Basic Act would represent a landmark development in South Korea’s cryptocurrency regulatory framework.
As countries worldwide continue to refine their approaches to digital finance, South Korea’s proposed legislation aims to strike a balance between promoting innovation and ensuring sufficient regulatory oversight. The National Assembly is expected to review and debate the bill in the coming weeks.
Artistic rendition generated with DALL-E; Data visualized via TradingView
