South Korea

Layered on top of this baseline, but not yet enacted, is the Digital Asset Basic Act (DABA), a comprehensive proposal that would introduce licensing, registration and reporting requirements spanning trading, brokerage, custody and advisory businesses (CLM-KR-c9e2a4f1). FSC officials and ruling-party negotiators have provisionally agreed a structural feature of that regime -- a 20% cap on major-shareholder stakes in crypto exchanges, with exceptions up to 34% and a three-year grace period for incumbent shareholders above the cap (CLM-KR-d4b8f6c3) -- though the cap remains part of an unenacted negotiation rather than settled law.

The result is a two-tier picture: a registration and conduct baseline that is mature, enforced, and already shaping platform access decisions, sitting beneath a second-tier comprehensive licensing overlay that remains proposal-stage and contingent on further National Assembly action.

Outlook

DABA's next plausible enactment checkpoint is the third quarter of 2026. Passage would resolve the ownership-cap question definitively and extend licensing obligations to categories of digital-asset business -- brokerage, custody, advisory -- that currently sit outside the FTRA/VAUPA baseline. Continued delay would leave Korea's licensing perimeter unchanged: registration-and-conduct obligations enforced, but the broader market-structure questions unresolved. Sourcing on the ownership-cap negotiation and the DABA text itself remains T4-only; primary confirmation from FSC.go.kr or National Assembly bill text would materially firm up confidence here.

Second, NFTs: FSC guidance issued in mid-2024 treats NFTs as ordinary virtual assets on a case-by-case basis where they are mass-produced, fungible, fractionalizable, or capable of use in payment, while low-value, non-transferable NFTs remain outside crypto regulation altogether (CLM-KR-a7c5e9b4). This preserves a functional, substance-over-form test rather than a bright-line rule.

Third, tokenized equities: the Ministry of Economy and Finance has taken the position that tokenized stocks are securities rather than virtual assets, but this classification is contingent on FSC concurrence before Capital Markets Act tax and disclosure treatment can apply (CLM-KR-b8d4f2a9). This is a genuinely multi-stage, unresolved question and is tracked without a fixed regulatory_stage pending that inter-agency resolution.

Outlook

The most consequential near-term marker is February 2027, when the STO amendments become operative and Korea's DLT-based securities-issuance pathway becomes legally usable rather than merely legislated. Whether the Ministry of Economy and Finance's tokenized-stock view gains FSC concurrence is a second open marker with its own tax-treatment consequences; a resolution either way would settle a boundary question that currently leaves issuers of tokenized-equity products in genuine classification limbo. NFT classification is likely to remain a case-by-case administrative determination rather than move toward a bright-line statutory test in the near term.

Outlook

DABA is the only proposal currently positioned to close this gap, and current draft text has not been shown in this cycle's sourcing to extend specifically to staking, DeFi, or validator obligations. Until DABA or a dedicated successor measure addresses on-chain activity beyond exchange-intermediated lending directly, staking-as-a-service providers, DeFi protocol operators, and node/validator operators serving the Korean market operate in a regulatory vacuum rather than a merely under-enforced one. This module's evidence base remains thin and largely negative-finding in character; targeted research into FSC/DABA drafting text and any Bank of Korea commentary on proof-of-stake treatment is the priority gap to close.

The proposal has stalled specifically over who may issue stablecoins: the Bank of Korea has pushed for majority-bank ownership of issuers, while the FSC favors a more flexible ownership model, and this disagreement is the direct cause of DABA's continued non-enactment on the stablecoin front. Current drafts also show no systemic-designation regime for large stablecoins (CLM-KR-e1a8c5f4) -- a sourced negative finding held at low (Speculative) confidence given the complete absence of drafting language on the topic.

Outlook

Resolution of the Bank of Korea/FSC ownership dispute is the single gating event for Korea's entire stablecoin framework, tentatively expected around the third quarter of 2026 but carrying material timing uncertainty given the dispute's persistence. Until resolved, any KRW-pegged stablecoin activity in Korea will remain confined to pilot or proof-of-concept status, and foreign stablecoin issuers seeking Korean market access have no settled licensing pathway to follow. This is flagged for registry review as a possible candidate for sub-jurisdictional tracking given the three-way FSC/Bank of Korea/Ministry of Economy and Finance dynamic.

A separate suitability-style measure remains at guideline stage: the FSC has drafted rules that would cap listed-company and professional-investor crypto allocations at 5% of equity capital annually, limited to the top 20 cryptocurrencies by market value (CLM-KR-d6f1b3a8). This measure targets institutional exposure rather than retail custody risk and has not yet moved beyond proposal status.

Outlook

The custody, insurance and now anti-fraud protections form a stable and enforced core that is unlikely to be materially disturbed by DABA's eventual passage; DABA is expected to layer additional licensing obligations on top of, rather than replace, VAUPA's consumer-facing protections. The 5% institutional-allocation cap is the one open consumer-protection-adjacent question this cycle, and its progression from guideline to binding rule would be a meaningful tightening signal for institutional market participants specifically, distinct from the retail-facing custody regime already in force.

A second, independent tax question concerns tokenized equities: the Ministry of Economy and Finance's view that tokenized stocks are securities rather than virtual assets could open Capital Markets Act taxation as early as the second half of 2026 if the FSC concurs, potentially including tokens issued via overseas platforms (CLM-KR-b1d8f4a5). This is tracked as a multi-stage, contingent claim rather than a fixed regulatory stage, since the classification decision itself remains unresolved between agencies.

Outlook

The single most consequential near-term event for this module is the subcommittee's handling of the repeal bill: its outcome will determine whether the 1 January 2027 effective date survives as drafted, is delayed again, or is abolished outright, and Korea's three-prior-delay history makes any of those outcomes plausible. Separately, FSC concurrence (or non-concurrence) with the Ministry of Economy and Finance's tokenized-stock view would independently determine whether a second, distinct crypto-adjacent tax obligation activates in the second half of 2026.

Separately, a May 2026 amendment to the Foreign Exchange Transactions Act now requires entities conducting cross-border "virtual asset transfer business" -- including exchanges and custody firms -- to register with the Minister of Economy and Finance (CLM-KR-e4a2c6f9). This claim is enacted but not yet effective, and its precise implementation or effective date has not been established from available sourcing, an open gap requiring primary legislative text or a Ministry of Economy and Finance gazette notice to close. The Bank of Korea has separately planned monthly pre-registration and reporting of cross-border stablecoin and crypto transactions specifically to curb FX-related crypto crime (CLM-KR-f5b3d9a6); this composition corrected that claim's regulatory_stage from an internally inconsistent "in force" label to "proposed," since the underlying predicate and source framing describe a still-forward-looking plan rather than an implemented reporting mandate.

Outlook

The Travel Rule threshold-removal proposal and the FX Transactions Act's cross-border registration requirement point in the same direction -- toward closer, more granular oversight of cross-border crypto flows -- but neither has a settled implementation timeline yet. The FX Act registration requirement's missing effective date is the most consequential open question in this module: until primary sourcing establishes it, market participants moving crypto assets cross-border into or out of Korea cannot be told precisely when the new registration obligation binds them.