South Korea's crypto bill to bolster stablecoin rules, investor protection

The South Korean government's forthcoming Digital Asset Basic Act will include enhanced investor protection measures, such as strict liability for virtual asset providers and new rules for stablecoin issuers, Yonhap News reported. The legislation, which represents the second phase of the country's crypto regulations, is expected to impose no-fault liability on Virtual Asset Service Providers (VASPs) for damages resulting from hacking or system failures, similar to the country's Electronic Financial Transactions Act. The bill will also reportedly require stablecoin issuers to manage reserves in assets like deposits and government bonds and to place over 100% of the outstanding issuance in a trust or deposit with a custodian institution to insulate against bankruptcy risk. Additionally, the act aims to align VASP obligations for disclosure and advertising with the standards of the traditional finance industry and will permit the domestic sale of digital assets, provided there is sufficient information disclosure.