Korean Democratic Party Postpones Digital Asset Bill, Aims to Present Unified Draft Next Month

Korean Ruling Party Delays digital Asset Act Proposal Amidst Key Disagreements

Seoul, South Korea – The Democratic Party of Korea has postponed finalizing its proposed “Framework Act on Digital Assets” following a policy commitee meeting today, January 28th. While important progress was made, key disagreements remain, especially surrounding the ownership structure of Korean won-backed stablecoin issuers.

The party’s Digital Asset Task Force (TF) reported their discussions to Policy Committee Chairman Han jeong-ae, outlining areas of consensus and ongoing debate. Representative Ahn Do-geol, a participant in the meeting, announced that a unified plan is expected to be presented early next month, following further internal review and consultation with the government.

The TF has already agreed on several critical points, including naming the legislation the “Framework Act on Digital Assets” and establishing a minimum legal capital requirement of 5 billion won for stablecoin issuers. Recognizing the rising threat of cyberattacks, the Task Force also reached a consensus on the need for a virtual asset council involving the Bank of Korea to address security concerns.

However, a central point of contention remains the control structure of stablecoin issuers. While the TF agrees on the principle of majority control by traditional banks – specifically, a “bank 50% + 1 share” structure – opinions are divided on the exact implementation.Some members advocate for a 50/50 split, sparking ongoing discussion.

Further debate is also planned regarding the Financial services Commission’s proposal to cap major shareholder ownership in virtual asset exchanges at 15-20%.

“There is no conclusion yet,” Representative ahn conceded to reporters. “We have discussed the points of concern, alternatives, and the market’s reaction sufficiently. I don’t know what form the bill will take, but I think it will come out in a form that reflects the party’s agreed opinions and was discussed with the government.”

The delay underscores the complexities of regulating the rapidly evolving digital asset landscape and highlights the Korean government’s cautious approach to striking a balance between fostering innovation and ensuring financial stability.

Why did the Korean Democratic Party postpone the digital asset bill and plan to present a unified draft next month?

Korean Democratic Party Postpones Digital Asset Bill, Aims to Present Unified Draft Next month

The korean Democratic Party (DKP), a major political force in South Korea, has announced a postponement of its planned digital asset bill.Originally slated for immediate consideration, the party now intends to present a unified draft next month, signaling a strategic shift towards broader consensus-building on the rapidly evolving landscape of cryptocurrency and blockchain technology. This delay impacts potential regulations surrounding crypto assets, virtual asset trading, and the broader digital economy within the nation.

Reasons Behind the Postponement

Several factors contributed to the DKP’s decision to delay the bill. Primarily, internal disagreements regarding key provisions proved tough to reconcile. Sources indicate differing viewpoints on:

* Investor Protection: Balancing innovation with safeguards for retail investors remains a central challenge. Debates centered on the level of disclosure required for digital asset projects and the establishment of clear liability frameworks.

* Taxation of Cryptocurrency: The optimal approach to taxing crypto gains continues to be a contentious issue. Discussions involved exploring capital gains tax rates,potential exemptions for small investors,and mechanisms for tracking virtual currency transactions.

* anti-Money Laundering (AML) Regulations: Strengthening AML protocols to prevent illicit activities involving cryptocurrencies is a priority, but the DKP sought to avoid overly burdensome regulations that could stifle legitimate innovation.

* Stablecoin Regulation: The increasing prominence of stablecoins – digital assets pegged to a stable value like the US dollar – prompted debate on their regulatory classification and potential systemic risks.

The party leadership recognized that pushing forward with a divided front could result in a weak and ineffective bill, possibly hindering the long-term progress of the blockchain industry in Korea.

What a Unified Draft Might Look Like

The DKP’s commitment to a unified draft suggests a move towards a more extensive and balanced regulatory framework. experts anticipate the revised bill will likely incorporate elements addressing the following:

1. Clear Definitions: Establishing precise definitions for key terms like “virtual asset,” “cryptocurrency,” and “digital asset” to provide legal clarity.
2. Licensing Requirements: Introducing licensing requirements for crypto exchanges and other virtual asset service providers to ensure compliance with regulatory standards.
3. Custody Solutions: Addressing the secure custody of digital assets held by exchanges and investors, potentially through the implementation of qualified custodian requirements.
4. Enhanced Disclosure: Mandating greater clarity from crypto projects regarding their technology, team, and financial status.
5. Consumer Protection Measures: Implementing measures to protect consumers from fraud, market manipulation, and other risks associated with cryptocurrency investing.

Impact on the Korean Crypto Market

The postponement has created a period of uncertainty for the Korean crypto market, one of the most active globally. While some investors expressed concern over potential delays in regulatory clarity, others welcomed the opportunity for a more thoughtful and well-considered approach.

The Korean crypto exchange landscape, currently dominated by players like Upbit, Bithumb, and Coinone, will be closely watching the development of the unified draft. Any new regulations could considerably impact their operations and competitive positioning.

ancient Context: Korea’s Approach to Crypto

South Korea has historically taken a cautious, yet pragmatic, approach to cryptocurrencies. Initially,the government imposed strict regulations,including a ban on Initial Coin Offerings (ICOs) in 2017. However, recognizing the potential of blockchain technology and the growing demand for digital assets, the government gradually softened its stance.

In 2020, South Korea implemented a comprehensive AML framework for crypto exchanges, requiring them to verify customer identities and report suspicious transactions. This move demonstrated a commitment to combating financial crime while allowing the crypto market to continue to develop.

The Broader Regional Implications

korea’s regulatory decisions often have ripple effects across the broader Asian region. Neighboring countries like Japan and Singapore are also actively developing their own regulatory frameworks for digital assets. A well-crafted and balanced regulatory approach in Korea could serve as a model for other nations seeking to harness the benefits of blockchain technology while mitigating its risks. The delay, however, means a potential loss of first-mover advantage in establishing regional leadership in crypto regulation.

Looking Ahead: February Deadline

All eyes are now on the DKP as thay work towards presenting a unified draft next month. The success of this effort will be crucial in shaping the future of the digital asset industry in South Korea and potentially influencing the broader regional landscape. The February deadline represents a critical juncture for the Korean crypto market and its stakeholders.