Is Stablecoin Regulation Being Upgraded Again? South Korea's New Legislation Targets Risk Isolation and Investor Protection

【Block Rhythm】The Korean Financial Services Commission is advancing the second phase of cryptocurrency legislation. The latest draft of the “Digital Asset Basic Law” introduces a series of investor protection measures, which seem quite robust.

Here’s the key point—stablecoin issuers must hold reserve assets in low-risk categories, such as bank deposits and government bonds. They are also required to deposit or trust at least 100% of the issuance amount with banks or similar institutions, effectively adding an insurance layer for investors. Digital asset service providers will also bear no-fault liability, meaning they must compensate if issues arise.

It appears that the government aims to prevent issuer bankruptcy risks from affecting ordinary investors through this set of measures, and the approach is quite clear. Another noteworthy development is that South Korea may relax restrictions on the domestic sale of digital assets. Projects previously stalled due to ICO restrictions might consider issuing directly in Korea, avoiding the roundabout route of “overseas issuance and domestic circulation.”

However, there are still uncertainties. Key issues such as the qualification criteria for stablecoin issuers, specific approval processes, minimum capital requirements, and whether exchanges can both issue and circulate tokens—these are still not fully aligned between the Financial Services Commission and the Bank of Korea. Departments are coordinating their positions, but when a final decision will be made is uncertain. The government proposal is expected to be delayed until next year before it can be submitted.