The Financial Services Commission (FSC) of South Korea has initiated discussions on the second phase of its cryptocurrency regulatory framework, with plans to complete the draft bill in the second half of 2025.
The development in a recent announcement on the 15th of January is being spearheaded by FSC Vice Chairman Kim So-young, who emphasizes a systematic and comprehensive approach to regulation.
The framework is designed to encompass all aspects of the crypto ecosystem, including service providers, users, and markets.
Building on the successful implementation of the first regulatory framework in July 2024, which mandated exchanges to store at least 80% of user assets in independent cold wallets.
The new phase aims to enhance the transparency of exchange operations, particularly in areas such as new coin listings and stablecoin issuance.
Global Context and Strategic Alignment
South Korea’s regulatory development is being carefully aligned with global regulatory trends and best practices.
The FSC is particularly attentive to developments in other jurisdictions, including the European Union’s implementation of the Markets in Crypto-Assets (MiCA) regulation, and similar initiatives in Hong Kong and Singapore, where governments are working to establish themselves as virtual asset hubs.
The United States’ anticipated focus on clarifying regulatory agencies and establishing stablecoin regulations is also influencing South Korea’s approach.
Vice Chairman Kim has emphasized the importance of monitoring and adapting to these global changes while continuously reviewing and supplementing their current regulatory system to maintain competitiveness in the international crypto landscape.
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Implementation Strategy and Focus Areas
The FSC’s implementation strategy includes the formation of a dedicated task force and subcommittee comprising related organizations to review the details of each major component of the second-stage legislation.
A particular emphasis is being placed on stablecoin regulation, which has been identified as one of the key tasks.
The regulatory framework will incorporate strict management obligations for stablecoin issuers regarding reserve assets and will explicitly guarantee users’ redemption rights.
The commission plans to sequentially discuss these elements through the Virtual Asset Committee, working towards a detailed second-stage bill by the latter half of 2025.
Recent Developments and Market Impact
This regulatory initiative comes amid significant developments in South Korea’s crypto landscape.
The FSC has unveiled its “2025 Key Work Promotion Plan” for the virtual asset market, reflecting a balanced approach between fostering innovation and ensuring user protection.
Notably, the country has postponed its planned 20% crypto tax until January 2025, providing relief to investors in a market that has seen retail trading volumes reach $18 billion, particularly in tokens like XRP and Dogecoin.
The head of the South Korean stock exchange has also called for swift action in institutionalizing crypto to maintain competitiveness with international rivals.
These developments, combined with the ongoing regulatory work, indicate South Korea’s commitment to establishing a robust and competitive crypto ecosystem while ensuring appropriate oversight and investor protection.
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