According to financial authorities and National Assembly officials on Tuesday, the Financial Services Commission (FSC) is drafting the government’s proposal for the second phase of crypto-market regulation. Discussions are centering on tougher investor protections, enhanced governance standards for exchanges and clearer rules for digital-asset issuance.
Under the draft, stablecoin issuers may be required to manage reserve assets in the form of bank deposits or government bonds and to place assets equal to or exceeding the outstanding amount in custody or trust accounts at banks or other authorized institutions. The aim is to prevent issuer failures from directly harming investors.
The bill is also expected to introduce a no-fault liability rule, holding digital-asset operators responsible for damages caused by incidents such as hacking or system failures regardless of intent or negligence. Provisions similar to those applied in the traditional financial sector — including disclosure obligations, oversight of contract terms and restrictions on misleading advertising — are also under consideration.
The government plan would additionally allow domestic initial coin offerings, provided disclosure requirements are met. Since ICOs were effectively banned in 2017, many Korean projects have issued tokens overseas before listing them domestically, a practice regulators now seek to correct.
Governance reforms for major domestic exchanges — including Upbit, Bithumb, Coinone and Korbit — are also being reviewed. The FSC is reportedly considering introducing a major-shareholder fitness review and capping controlling shareholders’ stakes at around 15 percent, amid criticism that profits and decision-making power are overly concentrated among founders or small shareholder groups.
The FSC cautioned that details have yet to be finalized, noting that submission of the bill is likely to be pushed into next year due to disagreements with the Bank of Korea over stablecoin issuance.
The central bank argues that only consortia in which banks hold a majority stake of at least 51 percent should be allowed to issue stablecoins, citing financial stability and regulatory compliance. The FSC opposes this approach, saying it would unduly restrict participation by technology companies.
The two sides also differ on inter-agency coordination. The central bank favors creating a separate consultative body that would require unanimous agreement among relevant authorities, while the FSC maintains that no additional body is necessary because the commission already operates on a consensus-based system.
Other unresolved issues include where to set minimum capital requirements for issuers — currently under discussion within a range of 500 million won to 25 billion won — and whether exchanges should be allowed to engage in both issuance and distribution of stablecoins.
An FSC official said the agency is coordinating with related institutions and reviewing all options as discussions continue.
With the government bill delayed, the ruling party’s digital asset task force is reportedly preparing an alternative proposal based on bills already submitted to the National Assembly.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.Copyright ⓒ Aju Press All rights reserved.