Stablecoin Institutionalization Advances... Five Bills Proposed This Year

Kangil Lee of the Democratic Party Unveils 'Digital Asset Innovation Act' on September 4
Comprehensive Regulatory Framework Covering the Entire Lifecycle of the Digital Asset Market
Minimum Capital Requirement of 1 Billion Won to Be Maintained..

The institutionalization of stablecoins is rapidly gaining momentum in the political sphere. Both the ruling and opposition parties have introduced related bills five times just this year. The Financial Services Commission also plans to propose a government bill by October.

On September 4, Lee Kangil, a member of the Democratic Party of Korea, held a press conference at the National Assembly Communication Office to release the bill for the "Act on Innovation and Growth of the Digital Asset Industry (Digital Asset Innovation Act)." This bill was prepared through six National Assembly seminars and a task force of industry-academia-research experts since January. Legal advice was provided by Bae, Kim & Lee LLC.

Lee Kangil, a member of the Democratic Party of Korea (center), held a press conference at the National Assembly Communication Office on the 4th to explain the bill for the "Act on Innovation and Growth of the Digital Asset Industry (Digital Asset Innovation Act)." Fintech Industry Association

The bill defines nine types of business categories to clearly incorporate the digital asset industry into the regulatory framework. It also specifies the permissible scope of work for each business type. The focus is on providing regulatory clarity to market participants by ensuring that services currently offered in the market can be included within legal categories.

The bill establishes a comprehensive regulatory system covering the entire lifecycle of the digital asset market, including entry regulations, prudential regulations, business conduct regulations, disclosure regulations, and unfair trading regulations. Specifically, exchanges are subject to licensing, while the other business types are subject to registration. The minimum capital requirement for each business type, set at 1 billion won or more, will be stipulated by Presidential Decree and must be maintained both before and after commencing operations. Listing review standards and procedures are directly stipulated in the law so that the autonomy of exchanges and the supervisory authority of financial regulators can work in harmony. Digital asset issuance (ICO) will be permitted under a flexible review system led by a statutory association. A separate disclosure system, similar to the Financial Supervisory Service's DART, will be established to protect investors.

For stablecoins, a rigorous management system will be implemented, including issuer licensing, reserve asset requirements, and disclosure obligations, to ensure market stability and trust. The use of foreign stablecoins will only be permitted domestically if certain conditions are met, preventing regulatory arbitrage. Technical standards for interoperability will also be established. The bill secures the possibility of public institution intervention in crisis situations through the Financial Services Commission’s intervention authority and the Bank of Korea’s right to express opinions. The technical security responsibilities of digital asset service providers will also be strengthened. Lee stated, "The changes in the financial market ecosystem brought about by digital assets and stablecoins are an inevitable global trend," adding, "The stablecoin industry is one that Korea should proactively respond to, take the lead in, and foster as a national business."

The Digital Asset Innovation Act, released by Lee, a member of the National Policy Committee, is scheduled to be introduced next week. This marks the fifth stablecoin-related bill to be proposed this year. So far, Min Byungdeok, Ahn Dogeol, and Kim Hyunjung from the Democratic Party have proposed bills, while Kim Eunhye from the People Power Party has also introduced one.

The Financial Services Commission is currently preparing the second phase of virtual asset legislation. This will be the first government bill to address stablecoins. Kang Junhyun, the current ruling party secretary of the National Policy Committee, is expected to sponsor the bill. The government plans to review the various bills submitted to the National Assembly and refine the legislation to support both consumer protection and market development. Lee said, "The Financial Services Commission, political parties, and the Office of the President will form a task force to review the strengths and weaknesses of each bill," adding, "I hope a finalized bill will be produced within this year."