South Korea is set to announce the second phase of its cryptocurrency regulatory framework in the second half of 2025.
On January 15, the Financial Services Commission (FSC) held the second meeting of the Digital Assets Committee to outline the next phase of the Digital Asset User Protection Act.
Main Legislative Tasks in Korea’s New Legal Era
Local press reported on the discussions taking place at the government complex in Seoul. According to reports, the meeting focused on main legislative tasks. Specifically, the Digital Assets Committee has outlined a number of important tasks for the second phase.
Under the management of digital asset operators, the commission’s first task is to strengthen regulations on entry and business operations. This is to ensure transparency and protect users from unhealthy practices.
The second task involves trading regulations. The regulatory framework will establish a transparent information disclosure and listing system to enhance user protection. Discussion also includes the introduction of periodic disclosure systems similar to capital market practices.
The meeting also reviewed international trends, including stablecoin regulation. In this issue, the Digital Assets Commission will review global trends and regulatory frameworks to impose more stringent obligations on stablecoin issuers. This is to ensure reserves of assets and rights in return.
Vice President Kim So-young noted that Korea must integrate with global legal trends. He mentioned the European Union’s Digital Asset Markets Act (MiCA) and similar initiatives in Hong Kong and Singapore. The United States has also prioritized stablecoin regulation, a key focus of the upcoming legislative period in South Korea.
“Our legal system aims towards a comprehensive law. The policy review is being completed after 12 subcommittees and discussions by working groups at the working level. We will report the results to the Digital Assets Commission as soon as possible and ensure further procedures are carried out,” local press reported. reportedquoting Kim So-young.
FSC plans to establish working groups and subcommittees to review these projects, aiming to prepare a detailed draft for phase two in H2 2025.
Meanwhile, the first phase of the Digital Asset User Protection Act marked the beginning of a legal era in Korea. As TinTucBitcoin reported, the initial phase has resulted in significant developments, including Upbit’s disclosure under the new law.
However, Upbit, the largest cryptocurrency exchange in South Korea, has faced antitrust investigations, with the FSC detecting over 600K potential KYC (Know Your Customer) violations. Government scrutiny has raised questions about the exchange’s operations, with Vice President Kim emphasizing the need for comprehensive regulatory reform.
Resolving Past Controversies
Korea’s legal journey is not without challenges. In 2019, North Korea stole 342K Ethereum (ETH) from Upbit, drawing attention to the need for better security measures. FSC’s efforts to tighten regulation include addressing these vulnerabilities while balancing innovation and stability.
The government also announced plans to lift the ban on cryptocurrency investments by businesses, while signaling its commitment to promoting institutional participation.
Despite its high delisting rate, South Korea remains an important player in the global cryptocurrency market. According to TinTucBitcoin, the country ranks 3rd among major cryptocurrency centers after Dubai and Switzerland. Additionally, South Korea has recorded an increase in cryptocurrency transactions, reflecting growing adaptation and public perseverance amid regulatory upheavals.
FSC’s focus on striking a balance between innovation and stability is evident in its approach to the Digital Asset User Protection Act. By promoting a transparent and secure ecosystem, South Korea is aiming to become a global leader in digital asset regulation.
As the country prepares for phase 2 of its cryptocurrency regulatory framework, it is setting a precedent for other countries amid a rapidly changing digital asset market.
