A Critical Bill That Will Determine the Fate of Cryptocurrencies in South Korea Has Been Introduced

South Korea has taken a comprehensive step toward regulating the cryptocurrency market. The ruling Democratic Party of Korea today introduced a new bill called the “Digital Asset Basic Law,” aiming to create a holistic legal framework covering the issuance, trading, custody, and regulation of digital assets.

The proposal text adds that digital assets have now gone beyond being merely “virtual money” and have become a fundamental element bridging the gap between the real economy and financial markets. In this context, digital assets pegged to fiat currency or real-world assets (stablecoins) are defined as a special category and subjected to stricter regulations. Accordingly, stablecoin issuers will be required to obtain licenses, maintain a repayment reserve, and fulfill a repayment obligation guaranteeing users can recover their assets upon request.

The rationale for the bill highlighted the rapid institutionalization of digital assets on a global scale. It noted that major economies, particularly the United States, the European Union, and Japan, have implemented comprehensive regulations clarifying the legal status of digital assets, covering issuance, distribution, and investor protection. Examples cited included the GENIUS Act in the US, the MiCA regulation in the European Union, and the payment services law in Japan.

In South Korea, current regulations focus primarily on user protection and lack an integrated framework covering the entire sector. The new law aims to fill this gap. The proposal envisages establishing a legal definition of digital assets, licensing sector representatives according to their areas of activity, and creating disclosures and internal control standards to increase market transparency.

Furthermore, while a “Digital Asset Committee” is planned to be established for the coordination of digital asset policies, the development of self-regulatory structures and investor protection mechanisms across the sector is also among the objectives. The law also details the rules for auditing companies’ governance structures, risk management systems, and information technology infrastructure.

The proposal explicitly prohibits unfair trading practices such as insider trading, market manipulation, and fraud, and prévoit criminal penalties for those who violate these rules. It also plans for the establishment of special committees within the sector to evaluate products traded on the digital asset market and monitor abnormal transactions.

*This is not investment advice.