Who Gets the Won? What South Korea's Digital Asset Basic Act Is Deciding

Who Gets the Won? What South Korea's Digital Asset Basic Act Is Deciding

This fall, South Korea is finally expected to do something it has postponed for most of the past two years: put its comprehensive crypto law, the Digital Asset Basic Act, before the National Assembly, with the government's own target to finish the legislation inside 2026. Reading most coverage, you'd be forgiven for thinking the story is simple — Korea, one of the world's biggest crypto markets, is legalizing digital assets. The bill actually being drafted is more interesting than that. It is an argument about who gets to sit between Koreans and their digital won.

The scale is why this matters beyond Seoul. Korean won trading pairs now account for roughly 30 percent of global spot crypto volume, according to data firm Kaiko — a market so large that its rules become global liquidity conditions. And Korea has been regulating crypto for two years already; the Virtual Asset User Protection Act, its first-stage law, took effect in 2024 to protect users against exchange failures and police unfair trading. That was stage one, a market-safety law. The Basic Act is stage two, and it asks the harder question: who gets to participate in this market, and on what terms? It would introduce licensing for crypto businesses, disclosure rules for issuers, rules for how tokens are issued and listed, and a full legal regime for stablecoins — the tokens that try to hold a fixed value, usually one unit of a national currency, and that have become the plumbing for moving money in and out of crypto.

The fight over stablecoins is the part of this bill that stalled for a year, and it's the part worth the most attention. Analysts at a16z crypto estimate that roughly $115 billion has flowed offshore, largely into dollar-pegged stablecoins on overseas exchanges — a leak Seoul's regulators treat as a reason to build a domestic answer. The government's draft would require won stablecoin issuers to hold reserves of more than 100 percent of the coins in circulation, in short-term government bonds or high-liquidity assets, kept in a bankruptcy-remote trust so a failed issuer can't drag holders down. Issuers would need regulatory approval, could not pay holders interest, and foreign issuers — in practice Tether and Circle — could sell into Korea only by establishing a domestic branch.

But the reserve mechanics were never the holdup. The real fight is over who gets to be an issuer. The Bank of Korea has pushed for a consortium model that would require banks to hold a majority stake in won stablecoin issuers, in effect making Korea's digital money a licensed product of the banking system. Banks like that design; crypto companies and fintechs don't; and the two camps have been deadlocked since 2025, with the central bank and the Financial Services Commission at odds over who supervises what. If the banks win, Korean stablecoins become deposit-like bank liabilities — monitored, centralized, an extension of the existing monetary system rather than a rival to it. That is the whole difference between "crypto is legal in Korea" and "Korean crypto becomes part of the Korean banking system."

The same logic runs through the rest of the bill. Exchanges would face no-fault liability for hacks and system failures — compensating users automatically unless the user was at fault — a bar that is widely expected to force smaller platforms out of the market. Licensing would shift from a single permit to function-based "add-on" licenses, and exchanges that also issue stablecoins would be barred at the source, a conflict-of-interest rule. In the background sits a long-running debate over ownership caps on dominant platforms, a question aimed directly at Upbit, which handles roughly 72 percent of Korean crypto trading.

And then there is the supply side, the part of this story traders usually lead with because it's the easiest to read as a celebration: domestic token sales, banned since 2017, would be legal again under disclosure rules, with harsh liability for the issuers of junk projects. The same regime is adding friction on the other end, though. A 22 percent tax on annual crypto gains above about 2.5 million won (roughly $1,800) is set to take effect January 1, 2027, confirmed by the Finance Ministry, and Seoul recently extended the rules to cover personal wallets and overseas exchanges — the very escape routes that had softened the blow. A repeal effort is still pending in the assembly, so this is not settled.

That combination — legalization, taxation, institutionalization at once — is landing in a market that has had a rough year. Trading volume across Korea's five main exchanges collapsed roughly 55 percent in the first half of 2026, and Upbit and Bithumb reported sharply lower revenue, as bitcoin slid into the $70,000s in late August, roughly 40 percent below its 52-week high above $125,000. A burst of trading on August 21, when Upbit's daily volume jumped 273 percent to about $1.84 billion as bitcoin rallied, was a reminder of how fast Korean retail returns when prices move. Regulators have also been reminded that the timeline keeps slipping: policy groups are already pressing Seoul to pass interim stablecoin licensing before the bigger bill lands rather than waiting for it.

Don't confuse this law with a second one that surfaced in July. The National Asset Basic Act would modernize how the state manages its roughly 1,400 trillion won of assets and formally fold digital assets into national wealth — that's the government's own balance sheet, not the private market. The Basic Act regulates the market; the Asset Act concerns the state. The fact that both are moving at the same time is the real tell: Seoul has shifted from treating crypto as a casino to treating it as financial infrastructure worth building, taxing, and eventually owning. It is the most concrete expression yet of a global theme in which governments stop keeping crypto at arm's length and start writing it into their own monetary architecture — the same impulse that produced the U.S. stablecoin law and Europe's MiCA, but sharper because it's happening in a market carrying a third of global spot volume.

None of this is settled, and the open questions are the variables worth watching when the fall draft appears: whether banks keep a controlling stake in won stablecoin issuance, whether foreign issuers get a workable path into Korea, whether the 2027 tax survives its repeal fight, and whether Upbit faces a cap on its dominance. Each answer reallocates who profits from a market that moves 30 percent of global spot trading. For a U.S. investor there's no clean way to own this directly — Upbit's operator is privately held, and no U.S.-listed pure play on Korean crypto exists. The read-through is structural. This is what a market looks like when a major economy decides crypto belongs on its own rails, run by its own banks, taxed by its own state — and that is a statement about where crypto is heading generally, not just in Seoul.