Talks on Phase 2 virtual asset legislation delayed as Middle East tensions worsen

Discussions on the Digital Asset Framework Act, being pursued as part of Phase 2 legislation for virtual assets (cryptocurrencies), are losing momentum as ruling-party–government consultations have been postponed amid deteriorating conditions in the Middle East.

According to the industry on the 12th, consultations on the bill that the Democratic Party of Korea’s Digital Asset Task Force (TF) and the Financial Services Commission had planned to hold are not expected to take place this week, contrary to the original plan. A TF official said the schedule has yet to be finalized and that it is highly likely the talks will be pushed to next week or later.

The ruling-party–government meeting was originally set for the 5th, but was postponed once as volatility in financial markets increased following military clashes in the Middle East. A rescheduling was subsequently considered, but as the war situation has become even more unstable, the timing for resuming discussions has been pushed back again.

Still, the DP’s TF is maintaining its plan to introduce the Digital Asset Framework Act within this month. The TF said that while the timetable has been adjusted due to external factors, its resolve to push ahead with the legislation remains unchanged.

The biggest focal point in the current discussions is regulation of major shareholders’ equity stakes in virtual asset exchanges. In the talks, a proposal is reportedly being seriously considered to cap individual investors’ stakes at 20%, while allowing up to 34% on an exceptional basis when a corporation is the largest shareholder.

This standard would make the ceiling more explicit than the 15%–20% range previously reviewed by the Financial Services Commission. However, the proposal has not been finalized, and may be adjusted through ruling-party–government consultations and deliberations by the National Assembly’s Political Affairs Committee.

Experts suggest that the recent external environment may also have affected the policy timetable. Hwang Seok-jin, a professor at Dongguk University’s Graduate School of Information Security, said external factors such as rising energy prices and heightened geopolitical tensions may have led to a reprioritization of policy discussions.

The industry is also voicing concerns about the legislative delay. One virtual asset industry official said companies need clarity on the regulatory direction to set investment and business strategies, adding that once market conditions stabilize, related discussions should regain pace.