South Korean lawmaker proposes stablecoin licensing regime in new comprehensive crypto bill

A South Korean lawmaker unveiled a new bill on Tuesday to further establish a regulatory framework around crypto, including a new licensing regime for stablecoins.

Min Byeong-deok, a lawmaker for the ruling democratic party, said today in a press conference that the bill, named the Digital Asset Basic Act, will become the cornerstone for South Korea to excel in the global digital economy.

The new proposal builds on South Korea's existing law overseeing crypto, the Virtual Asset Investor Protection Act, which came into effect in July 2024. While the first legislation focused on providing a safety net for investors, the new legislation aims to set a comprehensive and structured framework for the local digital asset ecosystem.

A key component of the bill is the adoption of a licensing regime for stablecoin issuers, and a requirement for issuers to attain over $500 million Korean won ($367,890) in owner's capital. 

This part of the proposal aligns with recently elected President Lee Jae-myung's promise to approve and promote a Korean won-based stablecoin market to prevent the outflow of domestic capital via stablecoins based on other currencies. Min was the head of the digital asset committee under President Lee's election campaign.

Stablecoin regulations have been gaining traction in other parts of the world, where the U.S. has been pushing to legislate the Genius Act under endorsement by President Donald Trump. Hong Kong's legislative body also passed a stablecoin bill that mandates licensing for issuers, similar to what the new South Korean proposal aims to establish.

Min also cited examples of crypto regulations in the U.S., EU and Japan, noting how their frameworks include a broader set of rules encompassing issuance, circulation and trading of crypto assets.

Beyond stablecoins, the Digital Asset Basic Act aims to legally define digital assets and their application to service providers. It also proposes creating a Digital Asset Committee directly overseen by the president. Furthermore, the bill seeks to establish a legal basis for penalizing unfair practices in the crypto market.