South Korea's National Assembly to Strengthen Capital Market Regulations

Strategic Insights -

The National Assembly is poised to prioritize digital assets, financial crime prevention, and fintech platforms as part of an effort to bolster capital market regulations. Market watchers suggest that key legislations will focus on establishing security token offerings (STOs), legal frameworks, and financial fraud responses powered by artificial intelligence (AI) technologies. The assembly will also consider measures to foster fintech, allowing budding tech entities to issue and broker fractional investment securities on regulated trading platforms. The payment gateway (PG) industry is expected to face increased oversight following recent scandals.

Key Takeaways:

  • The National Assembly plans to discuss 20 key bills, with 8 of them related to the financial sector, as part of its drive to advance the capital market ecosystem and enhance investor protections.
  • The legislation on STOs, proposed by Rep. Min Byoung-dug, aims to provide a legal foundation for tokenized real estate, intellectual property, and other assets.
  • Fintechs with brokerage licenses will be allowed to issue, distribute, and manage fractional investment products, aligning with the Financial Services Commission's plan to authorize up to two OTC trading platforms.
  • Four bills will govern telecom and financial fraud prevention, designed to implement the government's comprehensive anti-voice phishing drive and provide leniency for whistleblowers or figures with minor involvement.
  • Virtual asset exchanges will be required to freeze accounts and refund account holders in cases of fraud-related monetary damages, adhering to the same stringent standards as traditional peers.
  • The payment gateway industry will face tougher oversight following recent scandals, including the TMON and WeMakePrice settlement failure incidents and the Lotte Card data leak.

Statistics:

  • 20 out of 224 key bills pushed by the ruling Democratic Party of Korea (DPK) will be discussed by the National Policy Committee.
  • 8 bills involve the financial sector, and many more are expected to pass with bipartisan support.
  • Fintechs have faced serious liquidity problems, with payment delays to sellers reaching 818.8 billion won ($151 million) by August 2024.
  • The Fair Trade Commission ordered TMON and WeMakePrice to comply with consumer protection laws and process refunds within three business days.

Sources:

  • Market watchers (exact date not provided)
  • "20 out of 224 key bills pushed by the ruling Democratic Party of Korea (DPK) will be discussed by the National Policy Committee."

Sources:

  • "Market sources"