PiCK
South Korea to Unveil Digital Asset Basic Act This Month, Weighs Delay to Exchange Ownership Caps
Summary
- The government’s draft Digital Asset Basic Act is set to be unveiled within November, and work is under way to introduce the basic law within the month.
- Limits on major shareholders’ stakes in cryptocurrency exchanges would likely be set at 15% to 20%, with a grace period under active consideration.
- Issuers of won-denominated stablecoins are expected to be limited to bank-led consortiums, though the government draft could still be revised during National Assembly deliberations.
Forecast Trend Report by Period
South Korea’s government draft of the Digital Asset Basic Act is set to be unveiled this month. A grace period is emerging as the leading option for proposed limits on major shareholders’ stakes in cryptocurrency exchanges, a key point of contention in the bill.
According to officials at relevant ministries on Nov. 8, the Financial Services Commission has begun final interagency consultations ahead of releasing the government’s proposal. The FSC is working toward introducing the bill within November.
The cap on major shareholders’ stakes in exchanges, one of the legislation’s central issues, is likely to remain in place. The government draft is expected to impose a 15% to 20% ownership limit, broadly in line with the rules for alternative trading systems under the Capital Markets Act, to address concerns that profits or control could become overly concentrated among a small number of founders or shareholders.
The proposal under review would, however, provide a grace period before full compliance is required. For example, major shareholders could be given two years to reduce their holdings, with no separate penalty if they do so within that period.
Issuers of won-denominated stablecoins are also expected to be limited to bank-led consortiums. The Bank of Korea has consistently argued that stablecoin issuers should be restricted to consortiums centered on banks.
Still, some members of the ruling Democratic Party believe innovative companies such as fintech firms should also be allowed to participate to support scalability. The government draft may yet be revised as the bill goes through deliberations in the National Assembly.
