South Korea Introduces Bill to Regulate Stablecoins with 500 Million Won Capital Requirement

South Korea is taking significant steps forward in its regulatory approach to cryptocurrencies, with a new bill introduced by lawmaker Min Byeong-deok. The Digital Asset Basic Act aims to establish a comprehensive legal framework for digital assets, complementing the existing Virtual Asset Investor Protection Act, which came into effect in July 2024. This new legislation goes beyond investor protection to define a broader legal foundation for digital asset activities in the country.

The bill includes a key provision for the implementation of a licensing system for stablecoin issuers. Under the proposed rules, stablecoin operators would need to maintain a minimum of 500 million Korean won in owner’s capital to qualify for a license. This requirement is designed to ensure financial accountability and support the government’s goal of promoting Korean won-denominated stablecoins. The measure is part of a broader policy agenda under President Lee Jae-myung, who has committed to enabling a domestic stablecoin market. Min, who led the digital asset committee during President Lee’s election campaign, emphasized that the legislation aims to curb capital flight through foreign-currency-based stablecoins and support a robust local digital financial system.

The legislative push in South Korea aligns with similar developments in other jurisdictions. In the United States, the Genius Act, which addresses stablecoin regulation, is gaining traction. Meanwhile, Hong Kong has recently enacted its own licensing framework for stablecoin issuers. These international examples appear to inform South Korea’s approach, as Min highlighted parallels with regulatory practices in the US, European Union, and Japan, particularly regarding the issuance, distribution, and trading of digital assets.

Beyond stablecoins, the Digital Asset Basic Act seeks to provide legal clarity on digital asset classifications and the responsibilities of service providers operating within the ecosystem. The bill includes provisions for the creation of a Digital Asset Committee to be directly overseen by the Office of the President, emphasizing a centralized oversight mechanism. Additionally, the proposed legislation outlines legal frameworks to address market misconduct, including penalties for unfair trading practices such as price manipulation or the dissemination of false information. These areas were not directly addressed by prior laws.

The bill also includes measures to standardize compliance procedures for exchanges and custodians operating in the country. If enacted, the Digital Asset Basic Act would mark a significant step in the evolution of South Korea’s crypto regulatory space. As jurisdictions around the world continue to develop their approaches to digital finance, South Korea’s proposed framework positions it among the countries seeking to balance innovation with oversight. The bill is expected to undergo further review and discussion in the National Assembly in the coming months.