South Korea New Law Aims to Regulate and Support Digital Assets

South Korea recently announced a groundbreaking cryptocurrency bill that might pave the way for a government-backed stablecoin market that prioritises regional innovation and increased user protection.

Korean Stablecoins Could Become Commonplace Soon

Legislator Min Byeong-deok of the ruling party introduced the proposed Digital Asset Basic Act, which outlines a licensing framework for stablecoin producers. Projects must have at least 500 million Korean won (about $367,890) in capital to be eligible. Although that may seem high, President Lee Jae-myung has been a major supporter of a stablecoin ecosystem that is controlled and scalable and is entirely backed by the Korean won.

This implies that for cryptocurrency users, South Korean won-based stablecoins may soon emerge as a respectable substitute for USDT and USDC, particularly for on-chain transactions free from capital flight or forex risk.

Proposed law introduces licensing and legal clarity.

Stablecoins are not the only topic of this law. It establishes a presidentially supervised Digital Asset Committee and suggests a legal definition for all digital assets. Developers, DeFi protocols, and exchanges that are already operating in Korea or are considering entering the market would greatly benefit from this significant move towards a mature and well-regulated sector.

If approved, the rule might also provide users greater transparency and confidence by cracking down on pump-and-dump tactics, rug pulls, and insider trading.

The bill draws from major global crypto models

According to Min, frameworks that are currently in place in the US, EU, Japan, and Hong Kong—particularly Hong Kong's licensing regulations for stablecoin issuers—were the inspiration for the bill. South Korea obviously doesn't want to fall behind while other countries move quickly and the United States pushes the Genius Act.

South Korea is poised to become a leading regulated market for blockchain and stablecoin innovation.

Both traditional and cryptocurrency investors in South Korea are excited about the new government. According to a Korean Chamber of Commerce and Industry survey that was reported by several local media sites, about 60% of participants intend to grow their cryptocurrency holdings under President Lee. On June 9, the stock market mirrored this optimism, as payment companies Kakao Pay and Danal both ended the day up 29.9%. Kakao Pay's digital wallet infrastructure and QR code payment method make it a possible beneficiary of a domestic stablecoin. The company is the fintech division of Kakao Corp., whose Web3 subsidiary created the Klaytn blockchain. Kaia was formed by the merger of Finschia, funded by Japanese messenger LINE.

Strong backing from the government, notably President Lee Jae-myung, indicates that South Korea wants to encourage innovation while upholding regulatory control. The action might establish won-based stablecoins as a reliable substitute for well-known tokens like USDT and USDC.