LUNA Price Rises 0.21% Amid South Korean Crypto Legislation Developments

On DEC 29 2025, LUNA experienced a modest price increase of 0.21% within 24 hours, reaching $0.0944. Despite this short-term gain, the token has seen a 10.97% decline over the past seven days, a 30.33% increase over one month, and a 77.31% drop over one year. These figures underscore the volatile nature of the token, particularly following the collapse of the Terra ecosystem in 2022, which had a profound impact on Korean investors and regulatory priorities.

The price movement of LUNA is occurring against the backdrop of South Korea’s evolving cryptocurrency regulatory landscape, which is expected to have significant implications for the broader digital asset market. Notably, South Korea’s proposed Digital Asset Basic Act, a comprehensive legislative framework for virtual assets, is currently in the final stages of development. This act, which aims to establish a balanced regulatory environment, is expected to be enacted in early 2026 following a delay caused by inter-agency disagreements.

South Korea's Cryptocurrency Regulatory Evolution

The Digital Asset Basic Act represents a pivotal step in South Korea’s efforts to create a stable and secure environment for virtual asset activities. The legislation builds upon earlier regulatory measures, including the Special Financial Transactions Information Act of 2021, which laid the groundwork for anti-money laundering (AML) and know-your-customer (KYC) requirements for virtual asset service providers (VASPs).

The latest legislative push, however, goes beyond compliance and introduces substantive investor protection measures. One of the most notable provisions is the no-fault liability framework, which makes VASPs automatically responsible for losses arising from hacking incidents or system failures. This strict liability model mirrors South Korea’s Electronic Financial Transactions Act and is a significant departure from traditional fault-based liability standards.

Additionally, the act imposes stringent reserve requirements on stablecoin issuers, particularly for won-pegged stablecoins. Issuers must maintain reserves in highly liquid, low-risk assets, including government bonds and bank deposits, and must place over 100% of outstanding issuance in trust or deposit arrangements with qualified custodians. These measures are intended to prevent scenarios where stablecoin redemptions cannot be honored due to insufficient reserves or insolvency.

Legislative Delays and Institutional Control Debates

Despite the progress made, the implementation timeline for the Digital Asset Basic Act has been delayed into 2026 due to ongoing disagreements among key government agencies. Specifically, the Financial Services Commission (FSC), the Bank of Korea, and the Ministry of Economy and Finance have been unable to reach consensus on the issuance rights for won-pegged stablecoins.

Some agencies advocate for restricting issuance rights to consortiums where banks hold majority stakes exceeding 51%, arguing that this would enhance financial stability and leverage existing regulatory frameworks. Others, however, express concerns about excessive concentration of power and the potential stifling of innovation, advocating for models that include fintech companies and regulated non-bank entities under strict supervision.

This debate has delayed the legislative process, pushing it into 2026. While the delay creates short-term uncertainty for market participants, it allows for more thorough deliberation, potentially resulting in a more resilient and balanced framework.

Implications for LUNA and the Virtual Asset Market

The regulatory developments in South Korea are expected to have wider implications for the LUNA token and the broader virtual asset ecosystem. As one of the major markets for cryptocurrency adoption, South Korea’s regulatory stance influences global market sentiment and investor behavior.

The no-fault liability provisions in the Digital Asset Basic Act may increase operational costs for virtual asset exchanges, including platforms that facilitate LUNA trading. However, these measures are likely to enhance investor confidence and reduce legal uncertainties, potentially attracting more institutional investors to the market.

Furthermore, the stringent stablecoin reserve requirements may impact the use of LUNA as a reserve asset in stablecoin operations. While LUNA is not a stablecoin itself, the broader regulatory focus on stablecoin integrity reflects an increasing skepticism toward algorithmic and non-collateralized models, which are central to the LUNA ecosystem.

Conclusion

The 0.21% increase in LUNA’s price on DEC 29 2025 occurs amid significant regulatory developments in South Korea, where the government is working to establish a comprehensive and balanced framework for virtual assets. The Digital Asset Basic Act, now delayed until 2026, introduces strict liability for VASPs, rigorous reserve requirements for stablecoin issuers, and enhanced investor protection measures. These provisions are intended to promote market stability, prevent systemic risks, and protect consumers from fraud and operational failures.

While the delays and disagreements over stablecoin issuance rights create short-term uncertainty, the ultimate goal of the legislation is to establish a regulatory environment that supports innovation while maintaining financial integrity. As the legislative process continues, the impact on LUNA and the broader virtual asset market will depend on how these new rules are implemented and enforced.

For now, the modest price increase of LUNA reflects a market that remains cautiously optimistic in the face of evolving regulatory dynamics. As South Korea moves closer to finalizing its Digital Asset Basic Act, the global virtual asset community will be watching closely to see how these developments shape the future of digital finance.