SOUTH KOREA Law and Practice Contributed by: Wooyoung Choi, Suhhee Han, Seonghwan Ju and Matt Younghoon Mok, Lee & Ko
industries. Major entertainment companies such as SM Entertainment and YG Entertainment have launched blockchain games and non-fungible tokens (NFTs) based on the IP of their artists, thereby expanding fan engagement experiences. Modhaus introduced an NFT-based voting sys- tem allowing fans to directly participate in group decision-making. In addition, KT Corporation and Gyeonggi Provincial Government implemented the “Gyeonggi Art On” project, through which per- formance videos were converted into NFTs and copyright revenues distributed. Overall, the Korean blockchain industry is showing clear growth momentum. According to the “2025 Blockchain Industry Survey” published by the Korea Internet and Security Agency (KISA), the number of blockchain solution providers is expected to increase from 553 in 2024 to 621 in 2025, while the market size is projected to expand from KRW416.2 billion to KRW471.9 billion during the same period. Issues Likely to Impact the Blockchain Industry In the near future, the key issues expected to impact the blockchain industry will primarily relate to virtual assets (digital assets). Currently, Korean laws gov- erning virtual assets mainly focus on user protection, unfair trading regulations, and AML requirements. However, the proposed Digital Asset Basic Act (DABA) is expected to comprehensively regulate the digital asset industry. The principal issues under discussion include the following. Systematisation of entry regulations for digital asset businesses Digital asset business categories are expected to be subdivided into trading/exchange, brokerage, cus- tody/management, payment/transfer, discretionary management, advisory services, order transmission, and trading/exchange agency services. In addition, the current VASP reporting regime is expected to be replaced with an authorisation and registration sys- tem, under which different entry regulations would apply depending on the type of digital asset business. Institutionalisation of stablecoins Regulations are expected to be introduced requiring banks to hold at least 50% plus one share in stable-
coin issuing entities (the so-called 51% Rule). Sta- blecoin issuers are also expected to become subject to various regulatory requirements, including entry regulations, reserve asset requirements, segregation of reserve assets, redemption guarantees, and disclo- sure obligations. Business regulations for foreign stablecoin issuers Regulations are expected to require foreign-issued stablecoins to satisfy certain conditions in order to be offered or sold in Korea or to Korean residents, such as establishing and registering a local branch in Korea and meeting reserve asset holding and custody standards. Discussion on shareholding restrictions for major shareholders of virtual asset exchanges The introduction of regulations imposing limits on the shareholding ratios of major shareholders in virtual asset exchanges is also under discussion. In addition, in line with the government’s roadmap permitting corporate participation in the virtual asset market, professional investors, such as listed com- panies, are expected to increasingly participate in the virtual asset market. 1.1.2 Regulatory Sandbox Korea has operated regulatory sandbox programmes since 2019 across six sectors: • ICT convergence; • industrial convergence; • innovative finance; • regulation-free special zones; • smart cities; and • research and development special zones. Specific examples relating to the blockchain sector Services designated as innovative financial services include platforms that issue beneficiary certificates for real estate management and disposal trusts, aircraft engine tangible asset trusts, and monetary claims trusts through electronic registration methods and enable trading using blockchain-based DLT. In addi- include the following. Innovative Finance
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