South Korea Democratic Party to submit Digital Asset Basic Act

South Korea’s Democratic Party to present a party-line bill for the Digital Asset Basic Act early next month after failing to come to an agreement with the Bank of Korea and the Financial Services Commission. The Digital Asset Basic Act would create a broad regulatory framework for digital assets, such as the issuance of won-pegged stablecoins.

The SK Democratic Party has been advocating for the passage of the Digital Asset Basic Act to institutionalize the won-pegged stablecoin. During this process, the government’s proposals contained conflicting points.

One proposal suggested that a unanimous agreement body is necessary for issuance permission, and the other suggested that the issuing institution should be a “consortium with a majority stake (50%+1 share) in banks.”

South Korea Democrats advance Digital Asset Bill amid challenges

On Tuesday, the South Korea Democratic Party’s Digital Asset Task Force (TF) held a closed-door meeting in the afternoon in the National Assembly Members’ Office Building to debate the integrated bill for the Digital Asset Basic Act. 

However, lawmakers expect challenges before the integrated bill is passed. According to Maeil Business Newspaper, the ruling and opposition parties must reach a consensus, as the chairman of the political affairs committee currently controls the people, and the government’s proposal may differ in specifics from the ruling party’s.

According to The Chosun Daily, Task Force Secretary Ahn Do-geol stated at the meeting that the committee could proceed with a single measure if a solution is reached through discussions with the government and the ruling party.

However, Rep. Lee Jeong-mun, chair of the Digital Asset TF, noted that the schedule remains unclear due to a dispute between the government and opposition parties, adding that consultations will be held as soon as feasible to close the legislative gap.

Jeong-mun said that the party is creating its own bill to establish its stance through the Policy Council of Lawmakers. He continued by saying that after the party has decided on its position, high-level party-government consultations will be used to try to settle disagreements with the government.

In a back briefing following the meeting, lawmaker Jeong-mun added that the government had been asked to present a plan since October of last year, but by the end of January, no answer had been received.

He also pointed out that even if a bill subcommittee is formed in February as a result of discussions amongst floor leaders, it is still unclear how many sessions will be required to finish the legislative process.

Ahn further revealed that TF members will convene next week to organize the main concerns, and by the end of January, “we will report to the Policy Committee chairperson and the floor leader to establish the party’s official stance.”

South Korea’s task force to create an integrated legislation for stablecoins

The “stablecoin” disciplinary system was the main topic of discussion throughout the meeting. Maeil Business Newspaper reported that the TF discussed creating an “integrated legislation” that combines a non-secured virtual asset regulation scheme with stablecoin (value-stable virtual asset) regulation in a single measure.

During the meeting, Ahn Do-geol commented, “It is desirable to create a possible integration law and cover the entire ecosystem.”  He further urged the committee that, if there are many issues and resolving them in a short period of time is difficult, they should consider processing stablecoins separately first.

According to Ahn, this would help address legislative gaps amid the rapidly expanding use of stablecoins globally.

Regarding the stablecoin issuer, the TF members emphasized “supporting the industry,” which would create opportunities for both corporations and banks. Ahn revealed that the TF members agreed to focus on the creative development of stablecoins while also promoting financial system stability.

Notably, SK’s efforts to establish integrated legislation governing stablecoins follow a global trend of countries attempting to control stablecoins. 

As previously reported by Cryptopolitan, Japan has already established a registration mechanism for stablecoin issuers. The European Union’s Markets in Crypto-Assets (MiCA) regulation also offers a thorough regional framework.

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