South Korea Proposes Comprehensive Digital Asset Framework with Strict Stablecoin Mandates

South Korea is moving toward a formalized regulatory environment for the cryptocurrency sector with the introduction of the 'Digital Asset Basic Act.' The proposed legislation aims to create a comprehensive legal structure governing the issuance, custody, and trading of digital assets, positioning them as a core medium connecting the real economy and financial markets. The bill seeks to establish clear rules for 'value-linked digital assets,' including those pegged to fiat currencies or real-world assets. Under the proposal, issuers of these assets must obtain official authorization and adhere to specific capital thresholds, operational capacity requirements, and mandatory refund reserves to ensure redemption obligations are met. This legislative push follows a period of internal friction between the Bank of Korea and the Financial Services Commission. The central bank previously advocated for a model where banks with 51% ownership hold exclusive issuance rights for won-pegged stablecoins, while regulators warned that such restrictions could stifle technological innovation. Beyond issuance, the act introduces rigorous licensing, registration, and reporting requirements for digital asset businesses, including brokers and custodians. It specifically targets market integrity by prohibiting unfair trading practices, such as market manipulation and the use of non-public information. In a parallel effort to enhance security, the Financial Services Commission and Financial Supervisory Service have ordered domestic cryptocurrency exchanges to adopt a standardized system for delaying withdrawals. This measure is specifically designed to mitigate the surge in voice phishing scams that rely on the speed of digital transfers.