South Korea speeds up push to pass Digital Asset Framework Act this fall South Korea’s government is moving to fast-track a long-awaited Digital Asset Framework Act, with Financial Services Commission (FSC) Chairman Kim Byoung-hwan saying officials will intensify consultations so lawmakers can consider the bill during the National Assembly’s fall session. Kim made the comments Aug. 24 during a plenary meeting of the Assembly’s Political Affairs Committee in Yeouido, Seoul, after Democratic Party lawmaker Lee Kang-il pressed the FSC on when the government would formally submit its version of the legislation. News1 reported the exchange. Kim said a proposal was being prepared and that the administration would step up consultations, though he offered no firm submission date and only pledged to “do his best” to speed up the process. What the second-stage law would cover The Digital Asset Framework Act represents the second phase of South Korea’s virtual-asset regulation. It is expected to create rules for: - Stablecoin issuance and supervision (a central, contentious issue); - Virtual asset service providers (VASPs), including licensing and reporting; - Disclosure obligations and internal controls for crypto businesses; - Resilience and operational standards for digital-asset systems; - Other products and services not fully covered by the first-phase law. Why the rush: stablecoins, ETFs and competition with global regulators Lawmakers and regulators say accelerating the bill is urgent to keep South Korea aligned with major markets — particularly the United States — where regulators are actively defining how existing securities and derivatives laws apply to digital assets. Lee noted U.S. agencies, including the SEC and CFTC, are clarifying asset classifications (commodities, securities, stablecoins) and examining products such as perpetual futures tied to Bitcoin spot prices. “The digital-asset market has moved beyond simple coin trading and into the financial system,” Lee said. Stablecoins are expected to dominate the second-stage debate. Authorities have been wrestling with who can issue won-denominated stablecoins, reserve and licensing requirements, and the roles of banks versus non-bank companies. The Bank of Korea has advocated a bank-led model for domestic stablecoins, citing implications for payments, monetary policy and financial stability. Those discussions are unfolding in parallel with the FSC’s legislative work. Interagency roadmap and linked initiatives In July, the FSC, Bank of Korea, Financial Supervisory Service and Korea Securities Depository announced a joint roadmap tying stablecoin rules to broader initiatives: central bank digital currency (CBDC) pilots, tokenized government bonds, and measures to boost the international use of the won. The government also signaled plans to develop tokenized securities and a legal framework for spot cryptocurrency ETFs — a prerequisite for any local spot-Bitcoin ETFs to operate under Korean securities rules. Regulatory friction and consolidation plans Stablecoin regulation has been a key source of delay, with disagreements over issuance eligibility, reserve supervision and the division of authority between agencies. The FSC told lawmakers in July it would prepare a unified proposal in coordination with the ruling Democratic Party; previous reporting has suggested as many as 10 pending digital-asset bills could be consolidated into a government and ruling-party package during 2026. Cross-border transfers, VASP rules and enforcement plumbing Separately, South Korea has already amended its Foreign Exchange Transactions Act to bring cross-border virtual-asset transfers into a formal regulatory regime. The amendment was promulgated on June 2 and will take effect in December after a six-month grace period. Under the new framework, firms offering cross-border virtual-asset transfer services must register with the Ministry of Economy and Finance and report overseas transactions through the Bank of Korea’s foreign-exchange reporting system. Authorities are refining VASP licensing and reporting rules to determine whether fintech firms can provide some cross-border services alongside registered exchanges and custodians. Current VASP registration is handled by the FSC’s Financial Intelligence Unit, which positions the FSC centrally in both the existing compliance regime and the second-stage legislation now being crafted. Implementing regulations will set additional standards on facilities, qualified personnel and technical connections for transmitting foreign-exchange and digital-asset transaction data. Next steps and political timeline At the Aug. 24 meeting Lee urged the FSC to submit its proposal soon so lawmakers could act during the fall session rather than letting the process roll into 2027. Kim reiterated that the FSC would accelerate consultations and “do its best” to meet the requested timetable, but offered no guaranteed deadline. If the government and ruling party do consolidate bills and resolve the stablecoin and jurisdictional disputes, lawmakers could field a comprehensive Digital Asset Framework Act that enshrines rules for issuers, platforms and new product types — a crucial step toward integrating crypto more fully into South Korea’s regulated financial system. Read more AI-generated news on: undefined/news