The government's bill on digital assets, which would set out the regulatory framework for South Korea's cryptocurrency industry, including who may issue and distribute won-pegged stablecoins, is due to be unveiled this month.
The Financial Services Commission (FSC) is in final consultations with the aim of releasing the government version of the Framework Act on Digital Assets, according to financial industry sources on the 8th. "We are preparing with the goal of having the digital asset framework act introduced within this month," a senior financial regulator said. "Not much has changed from the authorities' earlier draft."
Regulators had planned to produce a government bill last year, but talks dragged on amid disagreement over key issues such as ownership caps on major shareholders of exchanges and eligibility to issue stablecoins. Legislative discussions have gained momentum recently, however, as the ruling party pushed to delay taxation on cryptocurrency and presented the digital asset act as a prerequisite.
The digital asset act is a sweeping sectoral law that covers the issuance and distribution of stablecoins, requirements for virtual asset service providers and rules for exchanges, with the aim of bringing the cryptocurrency industry into the regulated financial system. FSC Chairman Lee Eok-won said at a press briefing early this year that the bill would consist of about 135 articles, but the final version is expected to run longer.
On the contentious question of ownership caps for major shareholders of cryptocurrency exchanges, the most likely approach is to grant a sufficient grace period of around three years. Under that plan, the cap would be set at 15% to 20%, in line with the level applied to alternative trading systems under the Financial Investment Services and Capital Markets Act, but no sanctions would follow if excess holdings are disposed of within a set period. Some observers say an alternative could be presented that limits voting rights rather than ownership stakes.
On another point of contention, the issuers of stablecoins are expected to be bank-led consortiums, the approach long advocated by the Bank of Korea. Still, specifics such as the ownership caps on exchanges and eligibility to issue stablecoins could change during deliberations in the National Assembly. "Even among ruling party lawmakers, views differ," a financial industry source said.
Original reporting by Kim Jung-woo for Seoul Economic Daily.
AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.
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