South Korea's Leap into Digital Asset Regulation

The Democratic Party of Korea is poised to introduce the "Digital Asset Innovation Act" next month, marking a significant step towards the formalization of the digital asset market. This groundbreaking legislation aims to categorize the digital asset industry into nine distinct sectors and proposes raising the capital requirement for stablecoin issuance to 1 billion won.

Stablecoins and Digital Assets: A New Era

Under the proposed act, digital assets will be classified into general digital assets and value-stable digital assets (stablecoins), each with specific issuance and circulation criteria. Stablecoins, pegged to fiat currencies or assets like gold, promise enhanced stability in the volatile digital asset market.

Industry Categories and Capital Requirements

The legislation delineates nine business categories within the digital asset industry, imposing a minimum capital requirement of 1 billion won for trading and exchange businesses, and 500 million won for others including custody, payment, and advisory services.

Reviving the Market with Regulation

Following the collapse of several virtual asset management companies, the bill seeks to reintroduce collective and discretionary investment businesses under a regulated framework, potentially revitalizing the domestic market.

Transparency and Oversight

A revamped disclosure system and the establishment of a Digital Asset Committee under the Financial Services Commission aim to ensure transparency and robust oversight, with significant representation from the private sector.