The party-government consultative meeting, the last hurdle before the formal introduction of the Basic Digital Asset Act (phase-two virtual asset law), was postponed indefinitely, citing the war involving the United States, Israel, and Iran. With local elections approaching in early June, some in the ruling party now say the bill may not pass this year.
According to reporting by ChosunBiz on the 11th, the party-government consultative meeting, which was postponed once last week, has not been rescheduled. Several members of the ruling party's virtual asset task force (TF) said, "With signs that the war between the United States and Iran will drag on, the party-government consultative meeting has been effectively postponed indefinitely." An aide to Rep. Han Jeong-ae, chair of the ruling party's policy committee, also said, "As of now, nothing has been decided about the schedule."
Even if the war ends, managing the blow to the real economy, including the spike in oil prices, is expected to become the top priority for the party and government. A TF member said, "It will likely take at least a few weeks to introduce the bill. Final passage may slip beyond this year."
Even if the party-government consultative meeting is held soon, smooth progress is unlikely. Earlier, the TF and the Financial Services Commission reached a compromise on limiting controlling shareholders' equity in virtual asset exchanges, but some in the ruling party still oppose it. After the National Assembly Research Service said the equity cap for controlling shareholders could be unconstitutional, caution reportedly grew within the party.
Opposition from experts and the industry also remains strong. At a seminar on ways to develop the digital asset industry hosted by the People Power Party on the 9th, Gachon University professor Jeon Seong-min said, "From the perspective of growing new industries such as virtual assets, measures like limiting controlling shareholders' equity risk weakening innovation and losing global competitiveness."
An industry official said, "Capping controlling shareholders' equity at virtual asset exchanges is like telling them to compete with overseas corporations while wearing shackles. Overseas exchanges are responding nimbly to market changes through swift decision-making."
Some say overseas virtual asset players are already encroaching on the domestic market. From January to September last year, 124.3 trillion won flowed from Korea's five major exchanges (Upbit, Bithumb, Korbit, Coinone, GOPAX) to overseas exchanges, nearly triple 2023's 45.5 trillion won. As of the first half of last year, won-denominated deposits at domestic exchanges stood at about 6.2 trillion won, down 40% from a year earlier. Domestic virtual asset transactions are contracting, and Korean investors are moving overseas.