Ruling Party Raises Stablecoin Issuance Threshold to ₩1 Billion… Allows Bank of Korea's Intervention Rights

JOON HYOUNG LEE

Summary

The Democratic Party of Korea announced it has raised the minimum capital requirement for issuing Korean won stablecoins to ₩1 billion.
The Innovation and Growth Act specifies the authority of monetary authorities, such as the Bank of Korea, to intervene in and request data or inspections of stablecoin issuers.
The Act also grants ICO approval rights to a statutory association, permitting digital asset issuance only if specified procedures are followed.

"Digital Asset Innovation and Growth Act" Released

Stablecoin Issuance Requirements Specified

Capital Requirement Raised from ₩500 Million to ₩1 Billion, Doubled

ICO Authorization Rights Granted to Statutory Associations

Park Chan-dae, the acting representative and floor leader of the Democratic Party of Korea, is speaking at the Supreme Council meeting held at the National Assembly on the 9th of this month. Photo = Kang Eun-gu, The Korea Economic Daily reporter

The Democratic Party of Korea will raise the minimum capital requirement for issuing Korean won stablecoins from ₩500 million to ₩1 billion, doubling the threshold.

On the 17th, at the 'Digital Asset Innovation Act Public Briefing' held at the National Assembly Members' Office Building in Seoul, the Democratic Party unveiled a draft of the "Digital Asset Market Innovation and Growth Act (Innovation and Growth Act)," which includes these stipulations. This bill defines the legal status of digital assets such as Bitcoin (BTC) and specifies comprehensive regulations for the related industry. Kang Jun-hyeon, a member of the Democratic Party, plans to propose this bill as early as next month.

The released bill is separate from the Digital Asset Basic Act, which was proposed by Min Byeong-deok of the Democratic Party on the 10th of this month. The party explained that the Innovation and Growth Act was prepared to complement the Basic Act, including requirements such as mandatory digital asset disclosures. At the briefing, Rep. Kang stated, “The Commercial Act is the constitution of the capital market,” and “The Digital Asset Basic Act will also serve as the constitution of the (virtual asset industry).”

Specifically, the Innovation and Growth Act stipulates requirements for issuing Korean won stablecoins. First, the bill sets the minimum capital requirement for issuing Korean won stablecoins at "₩1 billion or more." This is twice the requirement of the Digital Asset Basic Act (₩500 million). The Innovation and Growth Act also requires stablecoin issuers to publish their own audit reports at least once a month and external audits at least once a year.

Intervention authority of monetary authorities is also stipulated. The Innovation and Growth Act allows the Bank of Korea to express opinions on specific Korean won stablecoins to the Financial Services Commission if necessary. According to the Act, the FSC must respect the Bank of Korea's opinion unless there is a legitimate reason not to. The Bank of Korea may request data from won stablecoin issuers at any time and can also request inspections by the Financial Supervisory Service.

Additionally, some clauses of the Innovation and Growth Act are exempt for certain won stablecoins issued overseas. If specific conditions are met, such as the market capitalization of a Korean won stablecoin remaining under ₩1 billion over the past 12 months, the coins can be issued without a separate authorization process. The Act also clarifies that stablecoins are not securities under the Capital Markets Act, nor do they fall under electronic money or prepaid electronic payment methods as defined by the Electronic Financial Transactions Act.

The Innovation and Growth Act also contains measures to allow Initial Coin Offerings (ICOs), a campaign pledge of presidential candidate Lee Jae-myung. However, it states that approval from a statutory association established under relevant laws such as the Digital Asset Basic Act is required. Businesses that intend to issue or distribute digital assets must submit both a white paper on the token and a digital asset statement revised to legal requirements to the statutory association. If the association reviews the white paper and statement and posts them on the integrated disclosure system, issuance of the digital asset is permitted. Thus, ICO approval rights are given to the statutory association rather than a governmental authority.

The Democratic Party emphasized the need to speed up the enactment of the law. Yoo Dong-soo of the Democratic Party stated, “The (virtual asset) market is now led by the United States, which is far ahead,” and “Korea has missed its chance to lead the global market due to insufficient policies.” He added, “The government will provide support so that we can maintain competitiveness in the digital asset market, which is being reorganized around the United States since the launch of the Trump administration.”