South Korea’s Democratic Party advances Digital Asset Basic Act to regulate crypto

South Korea’s Democratic Party has formally proposed the Digital Asset Basic Act, introducing a stablecoin licensing regime and expanded oversight under President Lee Jae-myung’s administration.

During a June 10 press conference , lawmaker Min Byeong-deok announced the bill’s submission, calling it a foundational step toward comprehensive regulation of digital assets, including stablecoins, cryptocurrencies, and related service providers. 

Min said the legislation was designed to enhance transparency and investor protection while positioning South Korea as a global leader in the digital economy.

The Digital Asset Basic Act builds on the existing Virtual Asset Investor Protection Act, which came into effect in July 2024.

While the previous legislation focused primarily on safeguarding investors, the new proposal outlines a broader framework that defines digital assets, establishes new licensing and approval systems, and mandates oversight mechanisms under the Financial Services Commission.

A key feature of the bill is the licensing requirement for issuers of Korean won-backed stablecoins. 

Notably, issuers must maintain a minimum capital of ₩500 million (approximately $367,890) and obtain approval from the Financial Services Commission. 

Additionally, they must implement safeguards such as bankruptcy remoteness and reserve management to ensure user redemption rights even if the stablecoin issuer becomes insolvent.

Furthermore, the regulations lay the groundwork for regulating all digital asset issuances and trading activities. It includes provisions to establish a Digital Asset Committee under the President’s office to coordinate national digital asset policy.

Meanwhile, a separate entity dubbed the Digital Asset Industry Association would be tasked with monitoring market practices and evaluating the eligibility of tokens for exchange listings through dedicated subcommittees.

To address market misconduct, the bill grants the Financial Services Commission investigative authority and empowers it to impose penalties for unfair trading activities. It also introduces approval, registration, and reporting requirements for companies operating in the digital asset sector.

The introduction of the Digital Asset Basic Act comes just days after President Lee Jae-myung’s inauguration on June 4. Lee, who won the presidency with over 49% of the vote, had campaigned on a platform that included strong support for digital asset adoption and regulatory clarity.

His campaign proposals included legalizing spot crypto ETFs, expanding institutional access to digital assets, and enabling the nation’s pension fund to allocate capital into crypto markets.

Min Byeong-deok, who led the party’s digital asset committee during Lee’s campaign, has advocated for broader crypto regulation but has placed particular emphasis on the urgency of launching a domestic stablecoin framework to counter U.S. dollar-backed tokens like USDC and USDT.