South Korea’s ruling party is crafting a new legislative roadmap to regulate both the tokenization of real-world assets and the operation of stablecoins within the country’s current legal structure. The proposed framework seeks to foster a more institutional and secure environment for the use of crypto-based products in daily life, aiming to clarify their role within existing financial systems and promote broader adoption with clear rules.
New requirements for tokenized real-world assets
According to a Seoul-based economics magazine, the influential Democratic Party is planning to expand its comprehensive digital asset bill by including provisions that focus on tokens backed by real assets. Under this plan, any digital assets issued through the tokenization of real-world holdings will be required to have their collateral stored in a trust account, as stipulated by the Capital Markets Act. This provision intends to shield investors and users by ensuring robust asset backing and regulatory oversight.
Further specific guidelines on safeguarding these assets will be detailed by subsequent presidential decrees, providing a concrete legal basis for the monitoring and protection of tokenized assets. Lawmakers expect these measures to help establish safer and more transparent processes in the custody and supervision of newly created digital assets.
The draft bill also introduces new obligations for companies issuing digital tokens based on real-world assets. These firms will operate under tighter scrutiny by relevant authorities, with the goal of improving transparency and accountability across the tokenized asset market.
Stablecoin regulations and exemptions
Notably, the proposal classifies stablecoins as a means of payment within the framework of the country’s Foreign Exchange Transactions Act. This approach will allow stablecoin issuers to be supervised directly by currency authorities, foregoing the need for a separate registration procedure. In effect, stablecoins will be governed using mechanisms akin to those that regulate traditional foreign exchange instruments.
Additionally, the new draft sets forth exemptions for small-scale stablecoin transactions, particularly in the context of purchasing goods or services. These everyday transactions are slated to be excluded from the requirement to report foreign exchange activity, a move aimed at encouraging the day-to-day use of stablecoins while still maintaining oversight on larger transfers to uphold market stability.
In contrast to ongoing debates in the United States, South Korea’s legislative proposal explicitly contemplates a ban on offering interest for idle stablecoin balances. This measure is currently under consideration as part of efforts to prevent excessive risk-taking and ensure prudent management of stablecoins within the national payments system.
Known as the Basic Digital Assets Act, this proposed legislation marks South Korea’s second major legal package designed to address the regulatory landscape for digital assets. Despite its ambitious scope, the bill’s passage has encountered multiple delays during the legislative process. As a result, the initial implementation date, which had been set for 2025, has temporarily been put on hold.
These pending regulations are poised to provide greater legal clarity and investor protection in a rapidly evolving sector, as South Korea continues to adapt to the expanding use of blockchain technologies and crypto-financial products.
