[Exclusive] The First Virtual Asset Industry Act is Coming… "Stablecoin to be Licensed"

Min Byung-deok, a member of the Democratic Party of Korea, plans to propose next month

Opposition party's draft of the basic law on virtual assets obtained

The first bill of the 'second stage legislation' industry act

Full-scale incorporation of the industry into the institutional framework

Stablecoins cannot be issued without approval from the Financial Services Commission

A plan to promote the virtual asset industry will be announced every three years

A 'Digital Asset (Virtual Asset) Basic Law' will be proposed, making it impossible to issue 'stablecoins' (asset-linked digital assets) linked to the value of legal currency without approval from the Financial Services Commission. This follows the examples of major countries around the world, such as the European Union (EU) and Japan, which have established regulatory frameworks for stablecoins, and aims to establish issuer requirements in Korea as well.

According to a report by Hankyung.com on the 11th, the office of Min Byung-deok, a member of the Democratic Party of Korea, plans to propose a 'Digital Asset (Virtual Asset) Basic Law' next month, focusing on establishing regulations for stablecoins.

Outline of the Virtual Asset Industry and Basic Law… Main Points of Stablecoin Regulation

The Digital Asset (Virtual Asset) Basic Law is expected to be the first bill for the enactment of the virtual asset market industry act, the Virtual Asset Basic Law. Therefore, discussions in the National Assembly and financial authorities are expected to revolve around this bill.

A representative from Min Byung-deok's office stated, "Although discussions at the level of financial authorities have been slow, it is difficult to delay the second stage legislation for the promotion of the industry and market. The draft of the Digital Asset Basic Law is already in the final stages and is expected to be proposed next month," adding, "We will speed up the implementation of the bill by collaborating with related agencies as well as at the party level."

The 'Virtual Asset User Protection Act', which came into effect in July last year, focused on the obligations of businesses such as exchanges and the protection of users, whereas the upcoming Virtual Asset Basic Law is a comprehensive bill encompassing the entire ecosystem, including the issuance, distribution, disclosure, and listing of virtual assets. The full-scale regulatory framework, referred to as the 'second stage legislation' in the industry, is set to be activated.

According to the draft of the Virtual Asset Basic Law obtained by Hankyung.com, the basis for stablecoin issuance is established. It restricts the qualifications of issuers, allowing only those approved by the Financial Services Commission to issue stablecoins. However, it does not impose separate qualifications for other virtual assets.

Stablecoins are already subject to strict issuance regulations in major countries around the world. Unlike other virtual assets, they are linked to legal currency, and the EU's MiCA, which was implemented last year, has established a comprehensive regulatory framework for stablecoins. In the United States, three bills related to stablecoins have been proposed since the inauguration of the second Trump administration, and discussions on institutionalization are actively underway. Japan already established a regulatory framework for stablecoins in 2022.

In this context, the introduction of a 'licensing system' is being considered in Korea as well. Since the previous Virtual Asset User Protection Act was centered on exchange regulations, the concept of requiring prior approval from the authorities before issuance is new.

The Virtual Asset Basic Law, which Min Byung-deok plans to propose, includes measures to promote the virtual asset industry while strengthening the function of self-regulation.

Stablecoins require licensing, while other virtual assets do not impose issuer qualifications. However, all virtual assets, including stablecoins, are required to submit an issuance report to the authorities in advance. Therefore, virtual assets issued by domestic corporations can only be issued if they have been formally reviewed and accepted by the Financial Services Commission, regardless of the issuance amount or quantity.

Establishment of a Legal Association… The Financial Services Commission to Announce Industry Promotion Plans Every Three Years

The establishment of a legal association that strengthens the market's self-assessment and supervision functions is also noteworthy. The bill proposes the establishment of the 'Korea Digital Asset Industry Association', a legal association for the industry, to conduct reviews even during the listing, maintenance, and delisting of virtual assets.

Since it is an association based on law, virtual asset operators are required to join. Each member company is granted one voting right to prevent any particular company from gaining excessive influence.

Additionally, under the association, independent organizations such as the 'Listing Review Committee' and the 'Market Surveillance Committee' will be established.

The Listing Review Committee is responsible for reviewing the listing and delisting of virtual assets that digital asset exchanges intend to list or are currently listing. In particular, if there are violations of disclosure or issues with system stability (hacking), the Listing Review Committee will initiate a delisting review on its own authority.

The Market Surveillance Committee monitors unfair trading activities related to the trading of listed virtual assets and audits member companies. If any suspicious transactions are detected, it notifies the relevant digital asset exchange to take action.

Furthermore, it was proposed to establish a 'Digital Asset Committee' (composed of up to 15 members) under the existing Financial Services Commission. This effectively elevates the existing Virtual Asset Committee, which serves as an advisory body for virtual asset policies, to a decision-making body.

Through this organization, plans to promote the virtual asset industry will be developed. The bill mandates that the committee establish a basic plan for the development and promotion of the virtual industry every three years. Additionally, to establish the basic plan, an annual survey of virtual asset businesses is required, covering the issuance and distribution status of virtual assets, corporate business activities, stablecoin issuance status, and industry competitiveness evaluation.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com