Yonhap News: South Korea's Digital Assets Basic Law to Include No-Fault Compensation and Stablecoin Bankruptcy Isolation Mechanism, Government Bill May Be Delayed Until Next Year

December 30 – South Korea’s government is drafting the **Digital Assets Basic Law** (the second phase of crypto asset legislation), which is expected to include multiple investor protection measures. These may impose strict liability on digital asset service providers for no-fault losses and establish a bankruptcy risk isolation mechanism for stablecoin issuers. However, significant disagreements over core issues (such as stablecoin issuer rules) mean the government’s proposal is likely delayed until next year. Per reports, the draft under review by the Financial Services Commission (FSC) would require stablecoin issuers to hold reserve assets in low-risk instruments like deposits and **Treasury bonds** (U.S. English for government bonds). They must maintain funds equal to or exceeding 100% of their issuance balance, or place these funds in trust with banks or similar institutions to prevent bankruptcy risk from spreading to investors. Additionally, the draft may allow digital asset sales within South Korea under strengthened disclosure requirements—correcting the previous “overseas issuance, domestic circulation” practice stemming from the administrative **ban** (not just “restriction”) on ICOs. While the legislative framework is preliminarily in place, the FSC and institutions like the Bank of Korea still disagree on key issues: stablecoin issuer qualifications, approval processes, minimum capital thresholds, and whether exchanges can act as both issuers and trading platforms. The FSC noted relevant agencies are **bridging their differences** (U.S. phrasing for narrowing gaps) but have not finalized the plan yet. (Yonhap News)