A new legislative proposal in South Korea aims to establish a robust regulatory framework for the crypto industry, including a first-of-its-kind licensing regime for stablecoin issuers. Unveiled on Tuesday, the bill—named the Digital Asset Basic Act —has been introduced by Min Byeong-deok, a lawmaker from the ruling Democratic Party. This is part of the country’s broader vision to lead in the global digital economy.
Building on Existing Crypto Regulations
The Digital Asset Basic Act builds upon South Korea’s existing crypto legislation, the Virtual Asset Investor Protection Act. This previous law came into effect in July 2024. While the earlier law primarily focused on safeguarding investors, the new bill seeks to create a comprehensive and structured framework for the local digital asset ecosystem.
According to Min, this legislation will serve as the cornerstone for South Korea’s ambitions in the global digital economy:
“This bill will position South Korea as a leader in the global digital asset market by fostering innovation while ensuring consumer protection and market integrity.”
Stablecoin Licensing Regime: A Key Focus
One of the most significant components of the bill is the introduction of a licensing regime for stablecoin issuers. Under the proposed framework:
- Issuers must maintain a minimum owner’s capital of 500 million Korean won ($367,890).
- The licensing system aligns with President Lee Jae-myung’s vision to promote a Korean won-based stablecoin market. It aims to curb the outflow of domestic capital through foreign-currency-backed stablecoins.
Min, who previously headed the digital asset committee during President Lee’s election campaign, emphasized the importance of regulating stablecoins. This regulation is vital to ensure financial stability and prevent misuse.
Global Trends in Stablecoin Regulation
South Korea’s proposal reflects a growing global trend toward regulating stablecoins. Similar efforts are underway in other regions:
- In the U.S., lawmakers have been pushing for the Genius Act, which is endorsed by former President Donald Trump, to establish a regulatory framework for stablecoins.
- Hong Kong recently passed its own stablecoin legislation, mandating licensing for issuers—a move that closely mirrors South Korea’s proposal.
Min cited examples from the U.S., EU, and Japan, highlighting how their frameworks encompass a broad set of rules governing the issuance, circulation, and trading of crypto assets. By adopting a similar approach, South Korea aims to create a regulatory environment that balances innovation with oversight.
Beyond Stablecoins: Broader Implications of the Bill
The Digital Asset Basic Act extends beyond stablecoins. It proposes several key measures to shape the future of South Korea’s crypto ecosystem:
- Legal Definition of Digital Assets: The bill seeks to define digital assets and their applications for service providers. This will provide clarity for businesses operating in the space.
- Creation of a Digital Asset Committee: A new committee will be directly overseen by the president. This committee will oversee the development and regulation of the digital asset industry.
- Penalties for Unfair Practices: The bill establishes a legal basis for penalizing unfair practices in the crypto market, such as market manipulation and fraud.
These measures aim to foster trust and transparency in the rapidly evolving crypto industry while encouraging innovation and investment.
Why This Matters for South Korea
The introduction of the Digital Asset Basic Act underscores South Korea’s commitment to becoming a global leader in the digital economy. By implementing a licensing regime for stablecoins and creating a comprehensive regulatory framework, the country hopes to attract both domestic and international players to its crypto market.
Moreover, the focus on a Korean won-based stablecoin reflects a strategic effort to retain capital within the country. South Korea also aims to reduce reliance on foreign currencies like the U.S. dollar through this move. This strategy could strengthen South Korea’s position in the global stablecoin market, which has seen rapid growth in recent years.
Final Thoughts
The proposed Digital Asset Basic Act represents a significant step forward for South Korea’s crypto industry. By introducing a licensing regime for stablecoin issuers and establishing a structured regulatory framework, the bill aims to balance innovation with consumer protection and market integrity.
As global trends in stablecoin regulation continue to evolve, South Korea’s proactive approach positions it as a potential trailblazer in the digital asset space. If passed, the bill could set a precedent for other countries seeking to regulate their crypto markets effectively.
For now, all eyes are on South Korea as it takes bold steps toward shaping the future of the global digital economy.
