In a significant institutional move, the Korea Financial Investment Association (KOFIA) has established a dedicated Digital Strategy Team to support its member firms in expanding into digital assets and security tokens. Announced on January 30, 2025, this team operates under the newly created K-Capital Market Division, which also oversees pensions and taxation, signaling a holistic approach to modernizing the nation's capital markets.
Concurrently, South Korea's Democratic Party is fast-tracking the Virtual Asset Phase 2 Act, aiming to introduce comprehensive regulations ahead of the Lunar New Year. The proposed legislation focuses on two contentious areas: regulating stablecoins and imposing shareholder limits on digital asset exchanges. A key debate centers on whether banks or private tech companies should be allowed to issue South Korean won-backed stablecoins, with the Bank of Korea (BoK) advocating for banks to hold a majority stake to safeguard monetary policy and investor protection.
The Financial Services Commission (FSC), however, favors allowing private tech firms to issue stablecoins to accelerate market entry and ecosystem growth. The proposed law also includes a requirement for stablecoin issuers to hold a minimum capital of approximately $3.46 million (5 billion Won). Another major point of contention is a proposed cap of 15%-20% on the ownership stakes of major shareholders in crypto exchanges, a measure the FSC chair argues is necessary due to the public infrastructure nature of exchanges, but which faces opposition from industry insiders and the People Power Party (PPP).
Industry experts warn that prolonged political disagreements could delay the legislation, potentially causing South Korea's financial markets to fall behind global trends. Despite these regulatory challenges, the domestic digital asset market is gaining momentum, fueled by the introduction of KRW-backed stablecoin projects and the legalization of corporate crypto trading.
