Democratic Party's Push for Digital Asset Regulation
South Korea's Democratic Party is preparing to present a party-line bill for the Digital Asset Basic Act early next month. This move comes after failing to reach an agreement with the Bank of Korea and the Financial Services Commission regarding the proposed legislation. The Digital Asset Basic Act is intended to create a broad regulatory framework for digital assets, with a specific focus on the issuance of won-pegged stablecoins.
The Democratic Party has been a strong proponent of the Digital Asset Basic Act, aiming to institutionalize the won-pegged stablecoin market. However, the process has encountered conflicting proposals from the government. One suggestion required a unanimous agreement body for issuance permission, while another proposed that the issuing institution should be a "consortium with a majority stake (50%+1 share) in banks."
Challenges and Negotiations Surrounding the Bill
On Tuesday, the South Korea Democratic Party's Digital Asset Task Force (TF) convened a closed-door meeting at the National Assembly Members' Office Building to discuss the integrated bill for the Digital Asset Basic Act. Despite progress in drafting the bill, lawmakers anticipate challenges before its final passage.
According to Maeil Business Newspaper, consensus between the ruling and opposition parties is crucial, especially since the chairman of the political affairs committee currently holds significant influence. It is also noted that the government's proposal might differ in specific details from the ruling party's stance.
Task Force Secretary Ahn Do-geol stated at the meeting that the committee could proceed with a single measure if a resolution is achieved through discussions with the government and the ruling party. However, Rep. Lee Jeong-mun, chair of the Digital Asset TF, indicated that the legislative schedule remains uncertain due to ongoing disputes between the government and opposition parties. Consultations are planned to be held as soon as feasible to bridge this legislative gap.
Jeong-mun further explained that the party is developing its own bill to solidify its position through the Policy Council of Lawmakers. Once the party has finalized its stance, high-level party-government consultations will be initiated to resolve disagreements with the government.
In a subsequent briefing, lawmaker Jeong-mun mentioned that the government had been requested to present a plan since October of the previous year, but no response had been received by the end of January. He also highlighted that even if a bill subcommittee is formed in February following discussions among floor leaders, the number of sessions required to complete the legislative process remains unclear.
Ahn also revealed that TF members are scheduled to meet the following week to organize the main concerns. By the end of January, they intend to report to the Policy Committee chairperson and the floor leader to establish the party's official stance.
Focus on Integrated Legislation for Stablecoins
The primary focus of the meeting was the regulatory system for stablecoins. Maeil Business Newspaper reported that the TF explored the creation of an "integrated legislation" that would combine a regulation scheme for non-secured virtual assets with the regulation of stablecoins (value-stable virtual assets) into a single measure.
Ahn Do-geol commented during the meeting, stating, "It is desirable to create a possible integration law and cover the entire ecosystem." He also suggested that if numerous issues arise and resolving them within a short timeframe proves difficult, the committee should consider processing stablecoins separately first.
According to Ahn, this approach would help address legislative gaps, particularly given the rapidly expanding global use of stablecoins.
Regarding the entities that would issue stablecoins, TF members emphasized "supporting the industry," aiming to create opportunities for both corporations and banks. Ahn disclosed that the TF members agreed to concentrate on the innovative development of stablecoins while concurrently promoting financial system stability.
South Korea's efforts to establish integrated legislation for stablecoins align with a global trend of countries seeking to regulate these digital assets. For example, Japan has already implemented a registration mechanism for stablecoin issuers. Additionally, the European Union's Markets in Crypto-Assets (MiCA) regulation provides a comprehensive regional framework for crypto assets, including stablecoins.