South Korea is advancing two regulatory measures that would tighten oversight of digital asset investments and establish a framework for stablecoin oversight. The Fair Trade Commission (FTC) has opened a 20-day advance notice period through September 14 for a revised consumer protection guideline governing prepaid installment transactions. Under the proposal, pre-need service providers and other prepaid installment businesses would be required to conduct thorough reviews before making high-risk investments, including exposure to virtual assets, derivatives, and leveraged financial products.
The revised guideline stresses that companies managing customer prepayments must balance stability, liquidity, and profitability. Investments carrying significant principal-loss risk, such as excessive allocations to cryptocurrencies or leveraged instruments, would need prior internal review and approval. Large firms holding at least 100 billion won (about $75 million) in customer prepayments would also have to establish a prepayment management review committee to ensure transparent and stable fund management.
Separately, Financial Services Commission Chairman Lee Eog-weon is set to appear before the National Assembly as lawmakers begin formal discussions on a comprehensive digital asset framework, often called the second phase of South Korea’s crypto regulatory regime. The first phase, the Virtual Asset User Protection Act, took effect in July 2024 and focused on investor safeguards. The proposed basic law on digital assets is expected to address broader market structure and stablecoin regulation, including reserve management, redemption rights, and disclosure requirements.
A National Assembly official cited by Edaily said the bill is being pushed for introduction before the upcoming parliamentary audit and for passage during the regular September session, though divisions within the ruling party and other pending issues could complicate the timeline. The FTC will accept feedback during its notice period before finalizing its guideline.
The measures reflect South Korea’s cautious approach to digital assets, balancing innovation with investor and consumer protection. While clearer stablecoin rules could provide legal certainty and strengthen South Korea’s position as a crypto hub, the additional scrutiny could also discourage corporate participation in speculative assets.
