South Korea's ruling political party has decided to move forward with a plan to institutionalize tokenized real-world assets and stablecoins under existing legal frameworks.

According to a report from Seoul Economic Daily, the Democratic Party of Korea has included provisions regarding digital assets linked to RWAs in its proposal for the upcoming "Digital Asset Basic Act."

The bill reportedly requires issuers of tokenized RWAs to deposit the linked assets into a managed trust, as stipulated in the Capital Markets Act. Further details will be established in a presidential decree, the report said.

Meanwhile, the report said the proposal classifies stablecoins as a "means of payment" under the country's Foreign Exchange Transactions Act. This means that local foreign exchange authorities will supervise stablecoin companies without separate registration.

Furthermore, the proposal exempts small-scale stablecoin transactions for goods and services from foreign exchange reporting requirements. This could be interpreted as an effort to promote everyday usage of stablecoins while maintaining oversight over large-scale transactions.

Stablecoin yield

Amid the ongoing debate in the U.S., South Korea's proposal would also ban yield on idle stablecoin balances, the report said.

Other provisions in the proposal require the local financial watchdog — the Financial Services Commission — to develop technical standards for stablecoin interoperability. It also aims to establish a unified disclosure system for digital assets.

The Digital Asset Basic Act is South Korea's second set of regulations for digital assets. It has been facing legislative delays, pushing back its original 2025 deadline.