South Korea’s ruling Democratic Party has introduced a draft law titled the “Digital Asset Framework Act”, outlining a comprehensive new regulatory approach for virtual assets. The proposal aims to establish clear legal guidelines for the issuance, trading, custody, and oversight of digital assets throughout the country, and has been made available for public discussion.
Key points of the proposed legal framework
According to the draft, digital assets are described as significant instruments for bridging the real economy and financial markets. The legislation calls for partitioning assets whose value is linked to physical commodities or official currencies into a separate category. For these asset-backed units to be issued, prior authorization will be mandatory, requiring issuers to meet reserve obligations and provide repayment guarantees.
The proposed regulation signals hopes that South Korea’s emerging expertise in digital finance will position the country as a leader in the global marketplace. Organizations wishing to launch such digital assets must first secure formal approval from competent authorities, and the review process will demand compliance with standards such as adequate minimum capital and operational capacity.
Additionally, all firms operating within the digital asset market will be obliged to obtain licenses, register with regulators, and follow rigorous reporting protocols. This applies to entities offering trading, brokerage, custody, or advisory services—all of which would be required to adhere to these enhanced compliance measures.
Inter-agency disagreements and recent developments
Debate over similar legislation had stalled in January, primarily due to divergence in opinion among regulatory agencies. The Bank of Korea, for example, advocated for allowing only majority-owned banks to issue won-pegged stablecoins, arguing that this would safeguard financial stability. In contrast, the Financial Services Commission warned that granting banks exclusive privileges could stifle innovation across the sector.
The latest draft aims to address these points of contention by proposing the establishment of an independent Digital Asset Committee. Tasked with shaping policy and drafting national development strategies, this committee would have broad authority to direct the evolution of the sector moving forward.
On the same day the bill was unveiled, South Korea’s Financial Services Commission and Financial Supervisory Service jointly released new operating guidelines for domestic cryptocurrency exchanges. Under these rules, all digital asset exchanges in the country will be required to implement a uniform system to delay withdrawal transactions—part of ongoing efforts to enhance market integrity.
Officials stress that these new requirements are designed to deter fast-moving online fraud schemes, which have increasingly targeted investors through digital platforms. In particular, the government’s regulatory push is a response to the growing number of phone-based scams reported in recent months.
The authorities emphasized that the focus of the new regulations is to prevent fraudulent activities that exploit short transaction windows, especially those conducted via phone calls, and to reinforce overall investor protection.
The legislative package shows a clear intent to balance innovation with consumer security by mandating proactive oversight. Industry observers point out that these measures could raise the compliance bar for market participants, while also shoring up public trust in digital assets.
However, some stakeholders express concern that excessive restrictions could dampen the local fintech ecosystem’s dynamism. Others contend that South Korea’s move brings its regulatory environment into closer alignment with global standards, and could ultimately attract international investment.
The Digital Asset Framework Act is still at the draft stage and open to public feedback. Lawmakers plan to consult extensively with the technology sector, financial institutions, and consumer representatives before bringing the final bill to a parliamentary vote.
If adopted, the legislation will likely usher in a new era for digital asset management, potentially advancing South Korea’s position as a forward-thinking hub for blockchain innovation while safeguarding users and contributing to market stability.
