South Korea Crypto Regulation

South Korea's ruling Democratic Party proposed a “Digital Asset Basic Act” that would establish a legal framework for digital assets, including issuance, trading, custody, and supervision. The proposal defines value-linked digital assets, including those tied to fiat currencies or real-world assets, as a category requiring issuer authorization, refund reserves, and redemption obligations. This move comes amid stalled negotiations since early this year when regulators clashed over who should be allowed to issue won-pegged stablecoins. The proposal aims to “establish a foundation for Korea to lead the global digital financial order” by introducing licensing, registration, and reporting requirements for digital asset businesses. This would include rules on disclosures, internal controls, and market conduct, such as prohibitions on unfair trading practices like market manipulation. A key date to watch is the expected submission of the proposal to the National Assembly, which could happen as early as next quarter. If passed, the new law would provide clarity on the regulatory environment for digital assets in South Korea, potentially attracting more investment and innovation in the sector.