South Korea's ruling Democratic Party on April 8 proposed the Digital Asset Basic Act, a comprehensive framework covering issuance, trading, custody, and supervision of digital assets across the country's $77.5 billion crypto market. The bill arrives 16 months after stablecoin governance disputes...
"With this governance model, it will be difficult to achieve the network effects and technological breakthroughs that stablecoins can deliver." — Ahn Do-geol, Secretary General, Democratic Party Digital Asset Task Force
South Korea's ruling Democratic Party on April 8 proposed the Digital Asset Basic Act, a comprehensive framework covering issuance, trading, custody, and supervision of digital assets across the country's $77.5 billion crypto market. The bill arrives 16 months after stablecoin governance disputes first stalled the legislation in December 2024, and introduces bank-style reserve, capital, and licensing requirements for stablecoin issuers while folding tokenized real-world assets under existing capital-markets law.
The legislation lands at a critical juncture. Some 16.2 million South Koreans — 31% of the population — hold crypto exchange accounts. An estimated $110 billion in crypto left the country in 2025 for offshore exchanges offering derivatives and leverage products unavailable under current domestic rules. Meanwhile, Kakao, Naver, and Toss are each building KRW-pegged stablecoin infrastructure, collectively representing a potential issuance base spanning 49 million KakaoTalk users, 10 million Upbit accounts, and Toss's $10 billion IPO-track super-app.
The bill's most contentious provision — whether banks must hold 51% ownership of stablecoin issuers — remains unresolved, pitting the Bank of Korea against the Financial Services Commission and a fintech industry that argues the restriction contradicts global precedent.
The Digital Asset Basic Act establishes four regulatory pillars:
Licensing and registration. All digital asset businesses — exchanges, brokerages, custodians, and advisory services — must obtain licenses and maintain ongoing reporting requirements. The bill creates a digital asset committee to coordinate policy between the Financial Services Commission, the Bank of Korea, and other agencies.
Stablecoin issuance standards. Entities issuing "value-linked digital assets" — stablecoins pegged to fiat currencies or real-world assets — must obtain prior regulatory approval. Issuers face mandated reserve requirements: 100% of reserves must be held in bank deposits or government bonds, entrusted to licensed custodians. Capital thresholds, operational capacity standards, and internal controls are specified, though exact numerical minimums have not been publicly disclosed.
Market conduct rules. The bill prohibits market manipulation and establishes enforcement mechanisms for unfair trading practices. This supplements the Virtual Asset User Protection Act that took effect in July 2024, which covered investor protection but left market-structure questions — leverage, derivatives, listing standards — unaddressed.
RWA integration. Tokenized real-world assets are folded under the Capital Markets Act rather than given a separate regulatory track. This builds on January 2026 amendments to the Capital Markets Act and the Electronic Securities Act, which created the legal foundation for security token offerings, effective 2027.
The Democratic Party has described KRW-denominated stablecoins as a "national strategic priority," framing them as infrastructure for digital payment competitiveness.
The most material dispute centers on issuance control. The Bank of Korea's position: only entities at least 51% owned by commercial banks should be permitted to issue won-pegged stablecoins. The rationale is that banks' existing regulatory compliance — capital adequacy, anti-money-laundering systems, deposit insurance frameworks — makes them uniquely qualified to maintain financial stability.
The Financial Services Commission disagrees. The FSC has warned that the 51% rule would stifle competition and innovation, blocking fintech firms with the technical capability to build scalable blockchain infrastructure. The FSC cites MiCA as precedent: 14 of 15 licensed stablecoin issuers in the EU are electronic money institutions, not banks. Japan's fintech-led yen stablecoin projects are referenced as additional evidence that non-bank entities can operate safely within regulated frameworks.
The Democratic Party's Digital Asset Task Force appears aligned with the FSC position, with Secretary General Ahn Do-geol publicly questioning whether the bank-consortium model can deliver the network effects stablecoins require. The Bank of Korea's counterargument: loosely regulated stablecoins could undermine foreign exchange controls and interfere with monetary policy implementation in an economy where the won is not freely convertible on blockchain rails.
This dispute delayed the bill once before. In December 2024, the same governance disagreement pushed the original legislative timeline past Q1 2025. The current bill sidesteps the 51% rule rather than resolving it, leaving the question for subsequent regulation or amendment.
South Korea's crypto market is large relative to its population and increasingly leaking capital offshore.
User base. As of early 2025, 16.2 million unique accounts existed across the five licensed won-denominated exchanges (Upbit, Bithumb, Coinone, Korbit, Gopax), up from 15.6 million in November 2024. That represents approximately 31% of South Korea's 51.7 million population.
Exchange concentration. Upbit controls 71.6% of domestic trading volume. Bithumb holds roughly 25.8%, with the remaining three exchanges splitting the balance. Together, Upbit and Bithumb account for 96% of volume. Upbit reported approximately $1.8 billion in average daily trading volume, while Bithumb processed about $383 million daily.
Capital flight. According to CoinGecko and Tiger Research, $110 billion in crypto left South Korea for offshore exchanges in 2025. The cause: domestic exchanges are restricted to spot trading only, while offshore platforms like Binance and Bybit offer leverage, derivatives, and a broader product set. Binance alone earned approximately ₩2.73 trillion ($1.9 billion) in fees from Korean users during 2025. Bybit collected roughly ₩1.12 trillion ($780 million).
The Digital Asset Basic Act does not directly address derivatives or leverage trading on domestic exchanges. However, the licensing framework could eventually create a pathway for regulated product expansion, which industry participants view as necessary to stem outflows.
Three of South Korea's largest technology conglomerates are building KRW-pegged stablecoin infrastructure, each leveraging different platform advantages.
Kakao Group has advanced its "Kakao Coin" from planning to active development. KakaoBank is building smart contract FX settlement systems, while KakaoPay filed six trademark applications in June 2025 for stablecoin ticker symbols (PKRW, KKRW, KRWP, KPKRW, KRWKP, KRWK). The group's stated plan: a unified digital wallet connecting KakaoTalk (49 million monthly active users), KakaoPay, and KakaoBank into a peer-to-peer payment system. KakaoPay's overseas payment volume grew 47.5% year-over-year through the first three quarters of 2025. Kakao maintains a partnership with Coinone exchange and is reportedly considering its acquisition.
Naver Financial is absorbing Dunamu, operator of Upbit, in an all-stock deal valued at approximately ₩15.1 trillion ($10.3 billion). Shareholders vote May 22, 2026, with closing now scheduled for September 30. The merged entity plans to launch a KRW-pegged stablecoin on Giwachain, Naver's blockchain, integrating it with Naver Pay, Naver Shopping, webtoons, CHZZK streaming, the Zepeto metaverse, and Snow messaging. Tiger Research analyst Yoon Seung-sik has noted that "Naver's acquisition of Upbit will clearly give it an advantage" in the stablecoin race, owing to Upbit's 10 million user base and existing exchange infrastructure.
Toss filed 24 trademark applications for KRW-denominated stablecoin names, including "TOSSKRW," in June 2025. The fintech firm — which is pursuing a $10 billion IPO — has been recruiting blockchain engineers since February 2026 for roles covering wallet systems, node operations, transaction processing, and compliance. Toss is building its own layer-1 mainnet and native token, aiming for a vertically integrated digital asset ecosystem alongside its existing payments, banking, and securities businesses.
None of these firms can currently issue stablecoins under South Korean law. The Digital Asset Basic Act, once passed, would create the legal pathway. The 51% bank ownership rule, if adopted, could significantly constrain Kakao and Toss — neither of which is a bank — while potentially favoring KakaoBank and Naver Financial's bank-affiliated structure.
The bill classifies tokenized RWAs under existing Capital Markets Act provisions rather than creating a standalone regime. Key requirements:
Underlying real assets — real estate, art, intellectual property, agricultural projects, and other non-standard investment contract securities — must be placed in managed trusts governed by the Capital Markets Act. This anchors digital tokens to verifiable reserves and subjects issuers to existing investor protection and disclosure standards.
The framework covers both standardized products (bonds) and alternative assets. A public-private working group is studying further expansion of "real-economy" asset tokenization. The approach builds on January 2026 amendments to the Capital Markets Act and the Electronic Securities Act, which established the legal foundation for tokenized securities. Those amendments take effect in 2027.
South Korean fintech firms are already positioning for this market. The regulatory clarity, once finalized, would allow issuance of tokenized securities on distributed ledgers while maintaining compliance with traditional disclosure standards.
South Korea's approach sits between two models:
The EU (MiCA): Permits both banks and electronic money institutions to issue stablecoins. Fourteen of fifteen licensed issuers are non-bank entities. Reserve requirements mandate segregation and full backing. The framework is operational.
The United States (Clarity Act / GENIUS Act): Still in legislative process. The draft Clarity Act framework envisions both bank and non-bank issuance with tiered prudential requirements. The FDIC recently proposed a separate prudential framework for bank stablecoins with deposit-insurance-adjacent protections.
Japan: Has permitted fintech-led yen stablecoin projects under its existing payments framework, though adoption remains limited.
South Korea's bill mirrors MiCA's reserve and licensing requirements but leaves the issuance-control question — who can issue — unresolved. If the Bank of Korea's 51% rule prevails, South Korea would adopt a more restrictive model than any of these jurisdictions. If the FSC position wins, the regime would approximate MiCA's approach.
The bill's RWA provisions track the direction of Singapore's MAS tokenized asset framework and Hong Kong's SFC guidelines, both of which fold tokenized securities under existing capital-markets regulation rather than creating separate regimes.
The Digital Asset Basic Act represents South Korea's most comprehensive attempt to regulate digital assets since the 2017 ICO ban. The legislation arrives under pressure: one-third of the population trades crypto, $110 billion fled offshore in a single year, and three conglomerates are racing to build stablecoin infrastructure they cannot yet legally deploy.
The bill's reserve and licensing requirements are substantive and align broadly with MiCA standards. The unresolved 51% ownership question is the primary risk factor. A bank-led model would concentrate issuance control in traditional financial institutions and potentially disadvantage fintech competitors. A fintech-inclusive model would mirror EU precedent but face resistance from a central bank concerned about monetary sovereignty.
The legislative timeline depends on whether the stablecoin governance dispute can be resolved before the June local elections. If the second-phase bill gains momentum afterward, South Korea could have operational stablecoin and RWA regulations by late 2026 or early 2027. Until then, the country's three largest tech firms will continue building infrastructure for a market they cannot yet enter.