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- South Korea pushes forward with new rules for tokenized assets
- Stablecoins gain payment status under proposed digital asset regulatory framework
- Lawmakers aim to boost adoption while tightening oversight on crypto
South Korea is moving faster in the move to formalize digital assets into a regulatory framework, with the Democratic arty of Korea pushing a proposal that could transform the nature of tokenized finance in the country. According to local reporting, the Digital Asset Basic Act that is to be implemented in the near future will offer transparent legal frameworks to tokenized real-world assets (RWAs) and stablecoins. However, it will not have to introduce new legal frameworks.
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Assets that are to be tokenized by Proven Structures.
The heart of the proposal is that issuers of tokenized RWAs are required to put underlying assets into managed trusts, as stipulated by the Capital Markets Act. The methodology is aimed at making sure that digital tokens are completely supported by verifiable assets, which will minimize risks associated with misrepresentation or a lack of sufficient collateralization.
In addition, the government is considering detailing the operational requirements in a more explicit manner as a presidential decree. It will detail the issuance of these tokenized instruments, their management, and auditing. As a result, the framework will be oriented towards building investor confidence and encouraging institutional participation in blockchain-based finance.
Stablecoins are accepted as payment instruments.
Parallel to this, the proposal proposes a substantial change to the way the law views stablecoins, categorizing them as a valid means of payment in the Foreign Exchange Transactions Act. This classification also puts foreign exchange authorities in charge of oversight duties so that issuers do not have to deal with different licensing regimes, and in effect, compliance is simplified.
Moreover, the bill provides clauses that will not subject low-value transactions involving stablecoins that are used to make daily purchases to foreign exchange reporting. This action is seen broadly as a strategic initiative to promote the use of money in the real world, but still keep regulatory control of the bigger transactions that might affect financial stability.
Yield Limits and Infrastructure Building.
The other interesting aspect of the proposal is the ban on yield generation on idle balances of stablecoins, which demonstrates the concern regarding systemic risks of interest-bearing models. Through limiting these practices, regulators will avoid unsustainable financial systems that may lead to the destabilization of the larger ecosystem.
Simultaneously, the Financial Services Commission will be charged with setting technical requirements to make stablecoin systems interoperable and developing a standardized disclosure regime on digital assets.
Sluggishness Remains in the Face of Regulatory Impetus.
The Digital Asset Basic Act, though with an ambitious scope, has faced numerous delays, which have pushed its expected implementation beyond the original 2025 deadline. However, the most recent events give hope of new political dedication to completing a regulatory framework that would harmonize innovation and regulation, making South Korea a potential pioneer in institutional crypto adoption.
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