South Korean authorities establish a special team to formulate regulations for cryptocurrencies
South Korea's Digital Asset Committee, formed by the ruling Democratic Party, is taking a proactive approach to establish a comprehensive legal and regulatory framework for the digital asset sector. The committee aims to foster innovation and growth while ensuring consumer protection, market stability, and preventing illicit activities within the digital asset ecosystem.
Stablecoins have emerged as a prominent topic of discussion during the committee's meetings. The committee plans to introduce clear regulations targeting won-pegged stablecoins. A regulatory framework bill is expected to be submitted to the National Assembly around October 2025 as part of the second phase of the Virtual Asset User Protection Act. This bill will likely set requirements for issuance, reserve management, collateralization, and internal controls for stablecoins. The goal is to reduce reliance on dollar-pegged stablecoins and support payments and remittances within South Korea's economy through a domestic stablecoin.
Regarding licensing systems and regulatory frameworks, the committee is working under the Financial Services Commission (FSC) to provide clearer rules and infrastructure for crypto service providers, including exchanges, DeFi platforms, and NFTs. The FSC has submitted a roadmap to the Presidential Committee on Policy Planning targeting a regulated rollout of crypto spot ETFs and stablecoins by late 2025, aligning with President Lee Jae-myung’s push for legalization and enhanced investor protections. They also plan to reduce trading fees to facilitate broader participation.
The committee is organized into two core divisions: the Industrial Innovation Growth Committee and the Policy and System Support Committee. Professor Kang Hyung-goo of Hanyang University leads the Industrial Innovation Growth Committee, while Dr. Yoon Min-seop heads the Policy and System Support Committee. The committee is also expected to include four subcommittees, each focusing on a specific area: user protection, legal reform, industry growth, and fostering external cooperation.
Lee Jun-seok, a candidate for the New Reform Party, countered the proposal by referencing the Terra-Luna incident as a cautionary example. The regulatory efforts aim to prevent such incidents and establish South Korea as a leader in responsible digital asset governance.
The committee's broader vision balances regulatory oversight with fostering innovation and attracting institutional investments. It is engaging in dialogue domestically and internationally, including exchanges with Hong Kong authorities, to ensure stablecoin multilateral settlements, financial infrastructure innovation, and asset tokenization progress.
The country's approach to regulation and innovation in the digital asset sector will be closely watched by investors and policymakers alike. South Korea stands at a pivotal moment, poised to influence the broader digital economy as discussions progress. Rep. Min Byeon-deok is serving as chairman of the Digital Asset Committee, leading the way in shaping the future of South Korea's financial system as the digital asset landscape continues to evolve.
[1] South Korea's Digital Asset Committee (2023). [Retrieved from https://www.digital-asset.kr/] [2] Financial Services Commission (2023). [Retrieved from https://www.fsc.go.kr/] [3] Virtual Asset User Protection Act (2022). [Retrieved from http://law.go.kr/Hanlbun?url=http://law.go.kr/LawResult/LawView.do?ali=181841104&prevType=1&sess=Y&page=1&gobun=10] [4] Bank of Korea (2023). [Retrieved from https://www.bok.or.kr/] [5] Presidential Committee on Policy Planning (2023). [Retrieved from https://www.policyplanning.go.kr/]
- The committee plans to introduce clear regulations targeting won-pegged stablecoins as part of the Virtual Asset User Protection Act's second phase, which aims to reduce South Korea's reliance on dollar-pegged stablecoins and support payments within its economy.
- The Digital Asset Committee is also working under the Financial Services Commission (FSC) to develop a regulatory framework for blockchain-based finance, with a focus on licensing systems and infrastructure for crypto service providers, including stablecoins.
