Ruling party to drop crypto exchange ownership rules... Proposal taking shape

The Democratic Party of Korea has decided, as its party line, not to include equity ownership regulations on crypto asset exchanges in its own Framework Act on Digital Assets, which also covers the introduction of won-denominated stablecoins.

The party’s own Framework Act on Digital Assets is expected to exclude a proposal to regulate equity stakes in crypto asset exchanges.

After a closed-door TF meeting, Rep. Lee Jung-moon, chair of the party’s Digital Assets Task Force (TF), told reporters, “If we discuss this as well, the bill—already delayed—could take even longer,” adding, “There was broad agreement that including it in the party line would pose problems both in terms of timing and legislative strategy.”

With the institutionalization of stablecoins, the Framework Act on Digital Assets has emerged with key points of contention, including the issue of who can issue them and regulations on equity stakes in crypto exchanges.

Backlash was strong not only from the ruling party but also from the opposition after the Financial Services Commission reviewed a plan to cap a single major shareholder’s stake in a crypto exchange at 20% or less.

The Democratic Party has effectively settled on a direction not to include it in this legislative package.

However, Lee said there were also views within the TF that the issue of exchange monopolies must be addressed, adding that further discussion is needed on measures to resolve it.

In other words, rather than in the Framework Act on Digital Assets—phase-two legislation for virtual assets—this would likely be taken up further in the subsequent phase-three legislative stage.

Regarding the Bank of Korea’s strongly advocated bank-led consortium model, differing views among members within the party were also identified.

Accordingly, the Democratic Party plans to convene another TF meeting next week to finalize the ruling party’s proposal.

It has set a timetable to report to the policy committee by late January and to submit its finalized draft in early next month.

Previously, the Democratic Party decided to produce its own legislative draft after the Financial Services Commission’s government bill was delayed.

As such, the Digital Assets TF held a separate closed-door meeting this afternoon at the National Assembly Members’ Office Building to discuss the party line on the Framework Act on Digital Assets.

There are currently a total of five bills sponsored by Democratic Party lawmakers that include the institutionalization of stablecoins.

If differences over key issues narrow and the party line is finalized, legislation for the Framework Act on Digital Assets is expected to pick up speed.

Still, without a government bill, it may become harder to secure cooperation from opposition lawmakers, meaning it could take some time before passage at a plenary session.

The Democratic Party’s Digital Assets TF stressed that there is room to reconcile positions sufficiently even if the party and the government differ, and said it would consult at an early date.