South Korea drafts comprehensive crypto regulation bill

TLDR

South Korea is moving toward a sweeping Digital Asset Basic Act that would put crypto trading, custody and stablecoins under a bank-style regulatory regime.

1. The draft Digital Asset Basic Act creates a single framework for issuing, trading, custody and supervision of digital assets, with strict rules for stablecoins and tokenized real-world assets.
2. Exchanges and service providers face tighter licensing, reserve, disclosure and internal control requirements, alongside already implemented measures like unified withdrawal delays and tougher travel rule enforcement.
3. The bill sits inside a broader Asia Pacific regulatory wave, so market participants should watch Koreas legislative timeline, stablecoin issuer rules and how its regime aligns with Japan, Hong Kong and Australia.

Deep Dive

1. What The Bill Actually Does

South Koreas ruling party has proposed a Digital Asset Basic Act, a comprehensive law covering issuance, trading, custody and supervision of digital assets, including Bitcoin and stablecoins, in a single framework. This draft would require issuers of value-linked digital assets such as fiat-pegged stablecoins or RWA tokens to obtain authorization and meet bank-style reserve, capital and operational standards, including clear redemption obligations and refund reserves, according to a detailed summary of the proposal.

Complementary proposals use existing Capital Markets and payments laws to legalize tokenized real-world assets and stablecoins in the near term, requiring full backing in regulated trusts and treating some stablecoins as payment instruments under foreign exchange rules, as described in recent policy analysis on tokenized RWAs and stablecoins in Korea.

2. Impact On Exchanges And Users

The draft Act would introduce licensing, registration and reporting requirements for digital asset businesses, including trading venues, brokers, custodians and advisors, and set rules on disclosures, internal controls and market conduct such as bans on manipulation and misuse of non-public information, per the same proposal.

In parallel, regulators have already implemented unified and stricter standards for withdrawal delay systems after data showed that about 59 percent of fraud-linked crypto accounts exploited exceptions, with losses around 170.5 billion won (about 124 million dollars), and they plan to expand the travel rule to smaller transactions and bar serious offenders from the market. These changes, together with mandated five-minute balance reconciliation and kill switches after a high-profile Bithumb error, significantly raise operational and compliance expectations for Korean exchanges.

3. Regional Context And What To Watch

Koreas push comes as other Asia Pacific regulators roll out overlapping digital asset regimes in Q2 2026, with Australia, Japan and Hong Kong all tightening licensing and market structure rules within the same quarter, according to a regional regulatory overview.

Key uncertainties include how the stablecoin rules are finalized, especially the dispute between the Bank of Korea and the Financial Services Commission over whether only bank-controlled entities can issue won-pegged stablecoins, and how fast the National Assembly moves the Digital Asset Basic Act through committee, debate and implementation. Market participants should track transitional deadlines for licensing, any caps on exchange ownership and whether Koreas approach to RWAs and stablecoins becomes a reference model for other jurisdictions.

Conclusion

South Koreas draft Digital Asset Basic Act, combined with already toughened withdrawal and surveillance rules, signals a shift from patchwork oversight toward a bank-like regulatory perimeter around crypto. For exchanges and issuers, the opportunity is clearer access to a large, regulated market, at the cost of heavier compliance and capital obligations. For users, the main tradeoff is stronger protection and fewer scams against slower, more tightly monitored flows and less room for lightly supervised platforms.