South Korea is preparing a unified digital asset law: what will change for the market
South Korea's regulator — the Financial Services Commission (FSC) — has announced the development of a unified bill regulating digital assets. The document is being created in close cooperation with the ruling party and is intended to replace the fragmented regulations currently in effect in the country.
The new law will cover key aspects of the crypto industry: issuance and circulation of stablecoins, licensing requirements for crypto exchanges, disclosure obligations, as well as internal control and risk management mechanisms. This is the first step toward creating a comprehensive legal framework that should reduce regulatory uncertainty for market participants.
Special attention is given to stablecoins — the FSC intends to establish clear rules for their issuance, reserve requirements, and redemption, which is particularly relevant after the collapse of TerraUSD in 2022, which severely impacted South Korean investors.
In parallel, authorities plan to bring forward an opposition party bill on abolishing the tax on income from crypto assets. Let me remind you that the current tax rate of 20% on profits exceeding 2.5 million won (approximately $1,900) has been repeatedly postponed and has drawn criticism from investors and businesses.
My Analysis
South Korea is steadily moving toward the status of a global crypto hub, and this law is a logical continuation of the policy started with the Virtual Asset User Protection Act. However, it is important to understand: tightening requirements for exchanges and issuers may lead to market consolidation and the displacement of small players. At the same time, abolishing the income tax will be a powerful incentive for retail investors and will bring back some of the capital that has moved to offshore jurisdictions. I expect the final version of the law to be adopted no earlier than the end of 2025, given the political disagreements between the parties.