The Democratic Party of Korea has been thrown into internal strife over equity regulations for virtual asset (coin) exchanges, a key sticking point in the legislation of the Digital Asset Basic Act (virtual asset phase-two law). The Democratic Party policy committee, which accepted the Financial Services Commission's regulatory plan while skipping the party's Digital Asset Task Force (TF) lawmakers who had led the bill so far, is set to introduce the bill, but strong opposition suggests the legislative process will not be smooth.
According to political circles on the 5th, the National Policy Committee of the National Assembly will discuss regulations to limit the equity of controlling shareholders of virtual asset exchanges at a session that day. Questioning will be led mainly by People Power Party lawmakers, and the party's National Policy Committee members have argued that forcing controlling shareholders of virtual asset exchanges to sell their equity is potentially unconstitutional.
On the morning of the previous day, heads of domestic virtual asset exchanges and DAXA (Digital Asset eXchange Association), a joint consultative body of digital asset exchanges, visited the National Assembly and voiced concerns about the bill. The Financial Services Commission (FSC) is pushing a plan to cap controlling shareholders' equity in virtual assets at 15%–20%, but exchange heads argue that if this regulation is introduced, it will hurt management efficiency and growth momentum. They also suggested that differentiated regulation is needed for small and midsize exchanges with low market share.
Opinions within the Democratic Party of Korea are also split on limiting exchange equity. The party's TF opposes exchange equity regulation, while the party's policy committee supports it. The policy committee also decided to accept bank-centered stablecoin issuance, which the TF had opposed. The TF had prepared the bill by communicating with the virtual asset industry since Aug. last year, but it has become pointless.
A TF official said, "The plan the TF prepared was rejected. We even proposed accepting, at a later time, the parts not coordinated with the Financial Services Commission (FSC), but the FSC instead aligned directly with the policy committee chair, and the policy committee chair decided to introduce the bill."
The bill is expected to face rough going before it clears the National Assembly. Not only the Democratic Party of Korea TF lawmakers on the National Policy Committee but also People Power Party lawmakers oppose the Financial Services Commission (FSC) regulatory plan. For the Digital Asset Basic Act to be enacted, it must be introduced with the support of at least 10 lawmakers, pass the National Policy Committee—its competent standing committee—by meeting the quorum (a majority), and then be approved at a plenary session.