The Financial Services Commission is in the final stages of drafting a bill on digital assets (Phase 2 of virtual asset legislation) focused on fostering the virtual asset industry and establishing order. Based on what has been disclosed so far, there appear to be differences from what the virtual asset industry had expected, drawing assessments that the approach is conservative. According to the financial and political sectors on the 9th, the Financial Services Commission submitted to the National Assembly last week the main issues and coordination plan for the basic law on digital assets. The plan includes requirements for issuers of stable coins (virtual assets that seek price stability by being linked to legal tender or real assets), minimum capital requirements, and proposals to overhaul the governance structure of virtual asset exchanges.
The line has been drawn to allow a consortium in which a bank holds “50%+1 share” as the issuer of stable coins. This is what the Bank of Korea (BOK) has argued for. The discussion is to start with bank-centered permission in the initial stage and later increase the participation of technology corporations. The Bank of Korea (BOK) emphasizes currency policy, foreign exchange management, and the risk of criminal abuse, and argues that a bank-centered consortium should issue stable coins.
However, in the virtual asset industry, there is a response that it is regrettable for banks, which do not have a high understanding of virtual assets, to take the lead. The Democratic Party of Korea opposes bank-centered issuance and is also discussing separate legislation centered on technology corporations. There is also backlash against the plan to overhaul the governance structure of virtual asset exchanges that the authorities are considering legislating. The financial authorities are reviewing a plan to establish a governance system for virtual asset exchanges, including a suitability review for major shareholders, and to stipulate a specialization principle that limits them to exchange operations only.
They are also looking into a plan to cap the ownership equity of a single major shareholder in an exchange at 15%. If this standard is finalized, major shareholders of Korea’s five largest won exchanges, including Upbit and Bithumb, will have to dispose of some equity. Dunamu, which operates Upbit, has Chair Song Chi-hyung holding 25.25%, and Bithumb has Bithumb Holdings holding 73.56% equity. Coinone (CEO Cha Myung-hoon 53.44%), Korbit (NXC 60.5%), and Gopax (Binance 67.45%) also have major shareholder equity exceeding 15%.
If a cap on major shareholder equity is finalized, the Dunamu–Naver Financial merger and Mirae Asset’s acquisition of Korbit could face setbacks. An industry official said, “If privately grown corporations are forced to sell equity, what startup would dare to pursue innovation?”
Coordination plans for the minimum capital requirement for issuance have also been fleshed out. Taking into account incentives for participation by innovative corporations, the authorities are discussing specifying at least 5 billion won, while reviewing whether to raise it later depending on circumstances. To prepare for hacking incidents that occur at exchanges, they are working on IT security standards comparable to those for financial companies and are reviewing the introduction of strict liability for damages without fault and a penalty surcharge amounting to 10% of sales in the event of an incident.
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