South Korea is taking a more formal approach to digital asset oversight, with a draft Digital Asset Framework Act proposed by the Democratic Party seeking to bring real-world asset (RWA) tokens and stablecoins into the country’s existing financial regulatory system. The move would shift previously underregulated segments of the crypto market into a clearer institutional framework.
RWA tokens would follow trust and capital market rules
Under the draft, any digital asset linked to a real-world asset would need to be backed by underlying assets held in managed trusts under the Capital Markets Act. More detailed requirements are expected to be defined later through presidential decree. In practice, this would place tokenized securities, government bonds, and asset-backed loans within a recognized legal structure, with stronger expectations around custody, asset backing, and investor safeguards. It could also make institutional participation easier by reducing legal ambiguity.
Stablecoins in FX transactions would be treated as payment instruments
The proposal also addresses stablecoins used in foreign exchange activity. These would be classified as payment instruments under the Foreign Exchange Transactions Act. Operators would not need separate business registration, but they would still remain under regulatory supervision. Smaller day-to-day transactions may be exempt from reporting requirements, while larger flows would continue to be monitored, reflecting a balance between transaction efficiency and capital control oversight.
The broader framework would ban interest payments to stablecoin holders, introduce technical standards for interoperability across blockchain networks, and create a unified disclosure system to standardize investor information across exchanges. However, several sensitive issues remain unresolved, including ownership rules for exchange shareholders and whether stablecoin issuers should face bank-like requirements. Those questions are still being reviewed by a task force.
Capital outflows and enforcement cases add urgency
The regulatory push comes amid visible pressure in the domestic market. In March, roughly $60 billion worth of crypto reportedly moved from South Korean platforms to overseas exchanges and private wallets. The scale of those transfers highlighted investor caution during regulatory uncertainty and exposed weaknesses in domestic oversight.
Law enforcement activity has added to the sense of urgency. Prosecutors recently sold 320 Bitcoin, valued at about $21.5 million, that had been seized in an illegal gambling case. The matter attracted additional attention after the assets were briefly stolen and later recovered, underscoring the real-world challenges of digital asset custody and management.
Overall, South Korea’s approach suggests it is not trying to build a crypto rulebook entirely from scratch. Instead, it is looking to fit RWAs and stablecoins into existing financial laws, signaling a regulatory strategy focused on practical enforcement, investor protection, and tighter control over capital flows while still leaving room for innovation.