South Korea's ruling party and government officials will convene a critical council meeting on March 5 to debate the long-awaited second phase of the Digital Asset Basic Act. This landmark session, the first in three months, aims to resolve deep-seated conflicts that could redefine the nation's entire crypto ecosystem. The meeting follows a prior session held on December 1 of last year and comes directly after the ruling Democratic Party's Digital Asset Task Force met on March 3 to align on core positions. The Financial Services Commission (FSC) will also hold its first virtual asset committee meeting of the new administration on March 4, setting the regulatory stage for a decisive week of policy formation.
The proposed Act represents South Korea's most ambitious attempt to create a unified legal framework for digital assets, seeking to consolidate and clarify the legal status of virtual assets, establish clear issuer and exchange responsibilities, and define consumer rights. South Korea's crypto trading volume consistently ranks among the global top five, making its regulatory decisions internationally influential.
The March 5 debate will center on two of the most contentious provisions: Exchange Ownership Caps, which would restrict the stakes of major shareholders in digital asset exchanges to prevent market concentration, and Stablecoin Issuer Eligibility, which seeks to strictly define which entities can issue stablecoins, with regulators likely favoring limiting issuance to licensed financial institutions like banks.
Simultaneously, in a landmark move for digital asset regulation, South Korean financial authorities are preparing to introduce a formal market maker system for cryptocurrency exchanges, directly adapting a cornerstone mechanism from traditional equity markets. The forthcoming foundational act on digital assets, expected this month, will reportedly contain provisions to legalize and structure these market-making activities. The FSC's plan will authorize professional institutional investors to act as official market makers on registered crypto exchanges to continuously provide bid and ask quotes, targeting sluggish trade execution and extreme price swings caused by thin liquidity.
The legislative process faces substantial hurdles. Industry groups have mounted strong opposition, fearing overly restrictive rules could drive business offshore. A significant procedural challenge remains as the primary sponsor of the bill has not yet been formally determined in the National Assembly, which could slow the bill's progression, potentially pushing final enactment into late 2025 or beyond.
South Korea's efforts mirror a global trend toward formalizing cryptocurrency rules, following the EU's MiCA framework implemented in 2024. The government's actions are also driven by past incidents like the 2022 collapse of the Terra-Luna ecosystem, founded by South Korean entrepreneur Do Kwon, which underscored the urgent need for consumer protection and systemic oversight.
