South Korea speeds up Digital Asset Framework Act for fall passage

South Korea has moved to accelerate work on its Digital Asset Framework Act, with Financial Services Commission Chairman Kim Byoung-hwan saying the government will step up consultations as lawmakers press for the legislation to be completed this fall.

News1 reported on Aug. 24 that Kim made the comments during a plenary meeting of the National Assembly’s Political Affairs Committee in Yeouido, Seoul, after Democratic Party lawmaker Lee Kang-il questioned when the government would submit its own version of the bill.

Kim said officials were preparing the proposal and would move into more intensive consultations, although he did not provide a firm submission date. When Lee asked whether the government could complete its work in time for legislation during the fall session rather than letting the process move into next year, Kim said he would do his best to speed up discussions.

The proposed law forms the second phase of South Korea’s virtual-asset regulatory framework and is expected to set rules covering stablecoin issuance, virtual asset service providers, disclosures, internal controls and other parts of the domestic crypto market.

Digital Asset Framework Act faces pressure for a fall timetable

Lee pressed the FSC to move faster, arguing that South Korea risks falling behind other major financial markets while its government proposal remains unfinished.

During the meeting, Lee pointed to regulatory work underway in the United States, where financial agencies have been defining how existing securities and derivatives laws apply to different types of digital assets.

He said the U.S. Securities and Exchange Commission has been clarifying the treatment of digital assets by separating them into categories that include commodities, securities and stablecoins. Lee also cited developments at the Commodity Futures Trading Commission involving perpetual futures linked to Bitcoin spot prices and the potential use of qualifying digital assets and stablecoins as collateral in derivatives markets.

“The digital-asset market has moved beyond simple coin trading and into the financial system,” Lee said.

Against that backdrop, Lee said lawmakers had already introduced proposals for a Digital Asset Framework Act but were still waiting for the government to formally submit its version.

The FSC had already told lawmakers in July that it planned to prepare a unified proposal with the ruling Democratic Party. As crypto.news previously reported, as many as 10 pending digital-asset bills could be combined into a government and ruling-party package during 2026.

The proposed consolidated framework is expected to cover stablecoins, exchanges, disclosure obligations, internal controls and requirements designed to improve the resilience of systems operated by digital-asset businesses.

Stablecoin rules remain a central part of the bill

Stablecoins are expected to take a prominent place in the second-stage legislation as South Korean regulators work through questions over who should be permitted to issue won-denominated tokens and how issuers should be supervised.

Government agencies have spent months discussing the structure of a domestic stablecoin framework, including licensing, reserve requirements and the roles of banks and non-bank companies.

The Bank of Korea has backed a bank-led model for won stablecoins, arguing that banks should take the leading role during the early stages of issuance because of possible effects on payments, monetary policy and financial stability. The FSC has been working on the digital-asset legislation alongside those discussions.

South Korea’s government outlined plans in July to introduce stablecoin legislation while also developing rules for tokenized government bonds and spot cryptocurrency exchange-traded funds. The digital asset roadmap included a legal framework for cross-border stablecoin transactions as authorities prepared several blockchain-related initiatives for the second half of 2026.

Separate policy work has also examined how won-backed stablecoins could fit into changes to the country’s foreign-exchange and payment infrastructure.

Under a roadmap jointly announced in July by the FSC, Bank of Korea, Financial Supervisory Service and Korea Securities Depository, regulators linked stablecoin legislation with plans for central bank digital currency pilots, tokenized government bonds and changes designed to increase the international use of the won.

Stablecoin regulation has previously delayed progress on South Korea’s second-stage digital-asset legislation. Regulators and lawmakers have disagreed over issues including issuance eligibility, reserve supervision and the division of authority between financial agencies.

VASP licensing is being developed alongside the framework

Rules affecting virtual asset service providers are also changing as authorities build separate licensing and reporting systems for crypto-related financial services.

South Korea has already revised its Foreign Exchange Transactions Act to bring cross-border virtual-asset transfers under a formal regulatory regime. The amended law was promulgated on June 2 and is scheduled to take effect in December after a six-month grace period.

Under the framework, companies providing cross-border virtual-asset transfer services will have to register with the Ministry of Economy and Finance and report overseas transactions through the Bank of Korea’s foreign-exchange reporting system.

Authorities have also been reviewing VASP licensing requirements to determine whether fintech companies should be allowed to provide some cross-border virtual-asset services alongside registered crypto exchanges and custodians.

Applicants are expected to require VASP registration and connections to institutions responsible for transmitting foreign-exchange and digital-asset transaction information. Additional standards covering facilities and qualified personnel are due to be set through implementing regulations.

Current VASP registration is administered through the Financial Intelligence Unit under the FSC, making the regulator a central participant in both the existing compliance system and the second-stage digital-asset legislation now being prepared.

Bitcoin ETFs form part of South Korea’s regulatory discussions

South Korean authorities have also been examining spot cryptocurrency ETFs as part of their work on bringing more digital-asset products under existing financial regulation.

The government’s July blockchain policy plans included work toward a framework for spot crypto ETFs alongside stablecoin rules and tokenized securities. A formal legal structure would be required before locally offered spot Bitcoin ETFs could operate under South Korea’s securities market rules.

The discussions add another issue for lawmakers to address as the Digital Asset Framework Act moves through consultations. While the first phase of South Korea’s virtual-asset legislation focused primarily on investor protection and unfair trading practices, the second phase is intended to establish rules for businesses, products and services that were not fully covered by the initial law.

At the Aug. 24 National Assembly meeting, Lee argued that the remaining legislative work should now be brought to completion and asked Kim directly whether the government could submit its proposal soon enough for lawmakers to act during the fall.

After being pressed on whether the process could be completed without slipping into 2027, Kim said the FSC would work to accelerate consultations and “do its best” to meet the requested timetable.