South Korea Advances Crypto Regulations, Focuses on Stablecoin Oversight
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A South Korean legislator has presented a detailed bill aimed at creating a more organized regulatory framework for cryptocurrency assets within the country. This proposed legislation, referred to as the Digital Asset Basic Act, was revealed on Tuesday by Min Byeong-deok, a member of the ruling Democratic Party.
The bill is intended to enhance the Virtual Asset Investor Protection Act, which came into force in July 2024, by extending beyond investor protections to define a comprehensive legal structure for digital asset operations.
Aligning with Global Stablecoin Trends
At a press conference, Min characterized the bill as a crucial step toward establishing South Korea as a frontrunner in the digital economy. A significant aspect of the legislation is the introduction of a licensing system for stablecoin issuers.
Under the proposed regulations, stablecoin operators will need to maintain a minimum capital of 500 million Korean won (approximately $367,890) to be eligible for a license. This requirement aims to ensure financial accountability and assist the government in promoting Korean won-denominated stablecoins.
This stablecoin licensing initiative aligns with the administration’s broader policy agenda under President Lee Jae-myung, who has previously pledged to enable a domestic stablecoin market.
Min, who chaired the digital asset committee during President Lee’s election campaign, noted that this measure aims to reduce capital outflow through foreign-currency-based stablecoins and bolster a strong local digital financial system.
The legislative initiative comes in response to similar movements in other regions. In the United States, the Genius Act, focusing on stablecoin regulation, is gaining momentum with backing from President Donald Trump. Meanwhile, Hong Kong has recently implemented its own licensing system for stablecoin issuers.
These global examples seem to influence South Korea’s strategy, as Min emphasized similarities with regulatory approaches in the US, European Union, and Japan, particularly concerning the issuance, distribution, and trading of digital assets.
Establishing Broader Oversight of Digital Assets
In addition to stablecoins, the Digital Asset Basic Act aims to clarify the legal definitions of digital asset categories and the responsibilities of service providers within the sector.
The bill includes provisions for establishing a Digital Asset Committee to be directly managed by the Office of the President, highlighting a centralized oversight approach.
Alongside structural reforms, the proposed legislation outlines legal frameworks to combat market misconduct, encompassing penalties for unfair trading practices such as price manipulation or the spread of false information—issues not effectively addressed by previous regulations.
The bill also introduces measures to standardize compliance protocols for exchanges and custodians operating in the country. If enacted, the Digital Asset Basic Act would signify a substantial advancement in South Korea’s cryptocurrency regulatory landscape.
As international jurisdictions continue to shape their approaches to digital finance, South Korea’s proposed framework positions it among nations striving to balance innovation with regulatory oversight. The bill is expected to undergo additional scrutiny and discussion in the National Assembly in the forthcoming months.
The global digital currency market cap valuation. | Source: TradingView.com
Featured image created with DALL-E, Chart from TradingView
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