South Korea Unifies Crypto Rules Amid Tax Repeal Debate

South Korea's Financial Services Commission (FSC) is working on a consolidated 'Digital Asset Basic Act' to unify the country's fragmented crypto and stablecoin rulemaking. The plan aims to replace or coordinate existing patchwork legislation, which has been delayed for months due to policy disagreements.

The FSC intends to draft the bill with the ruling Democratic Party, addressing key regulatory topics such as digital asset businesses, exchange entry requirements, disclosure obligations, internal controls, and system resilience standards. However, major unresolved issues remain, including stablecoin issuer structure and exchange ownership limits.

Regulators and lawmakers are split on whether won-denominated stablecoin issuers should be majority-owned by banks, a structure that would tie stablecoin minting power to traditional banking oversight. Another dispute centers on whether ownership limits should apply to major crypto exchanges, affecting the flow of liquidity and market-making dynamics.

In parallel, lawmakers are reviewing an opposition-backed proposal to repeal South Korea's planned crypto income tax before it takes effect in January 2027. The tax would apply a 20% rate plus 2% local income tax on annual crypto income from transferring or lending above 2.5 million won (approximately $1,700).