What is South Korea's Phase 2 crypto regulation and what does it cover?

South Korea's Phase 2 crypto framework, the Digital Asset Basic Act (DABA), is currently under National Assembly review and covers stablecoins, crypto ETFs, tokenisation of real-world assets, and corporate access to digital asset markets. It follows Phase 1 — the Virtual Asset User Protection Act enacted in July 2024 — which focused on exchange fund segregation and banning wash and insider trading.

Why is South Korea rushing to finalise its Phase 2 crypto regulations?

A record US$346 million stablecoin outflow left South Korea for overseas exchanges in June 2026, as investors sought derivatives, DeFi, and real-world asset products unavailable domestically. This outflow equalled 78% of South Korean investors' net overseas stock purchases that month. The capital flight triggered urgent calls from regulators and lawmakers to fast-track the Digital Asset Basic Act to retain domestic crypto activity and investor participation.

What is South Korea's proposed 22% crypto capital gains tax and when does it take effect?

A legislative proposal would impose a 22% capital gains tax on cryptocurrency profits exceeding 2.5 million Korean Won (approximately US$1,700) per year. The tax is currently scheduled to take effect from January 2027. Its passage is not certain — the proposal faces significant opposition — but if enacted, it would be one of the most material tax changes affecting South Korean crypto investors in the sector's history.

Will USDT and USDC be allowed under South Korea's new crypto regulatory framework?

This is a potential scenario, not guaranteed. The Financial Supervisory Service is reportedly considering excluding US dollar-denominated stablecoins — including Tether (CRYPTO:USDT) and USD Coin (CRYPTO:USDC) — from the framework in favour of Korean Won-denominated alternatives. If implemented, this would effectively shut the two largest global stablecoins out of South Korea's regulated market and accelerate the development of domestic Won-backed stablecoin products.

What does lifting the corporate crypto ban mean for South Korea's digital asset market?

Domestic South Korean firms have been prohibited from participating in cryptocurrency markets for nine years. Phase 2 of the regulatory framework will lift this ban, opening the market to corporate participation for the first time. This is a structural change — it could bring institutional-scale capital and corporate treasury activity into South Korean crypto markets, potentially deepening liquidity and creating new product demand across exchanges and tokenisation platforms.

Cryptocurrency

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South Korea speeds up Phase 2 crypto rules before 2027 tax

Written by Isaac FrancisPublished Aug 5, 2026, 12:10 PM

South Korea is accelerating the second phase of its cryptocurrency regulatory framework, the Digital Asset Basic Act (DABA), with a focus on establishing rules for stablecoins, crypto exchange-traded funds, tokenisation, and corporate access to digital asset markets.
The urgency behind the regulatory push follows a record US$346 million stablecoin outflow from South Korea to overseas exchanges in June 2026, as domestic investors sought access to high-risk derivatives, real-world asset tokenisation products, and decentralised finance services unavailable within the country.
The June outflow figure was equivalent to 78% of South Korean investors' net purchases of overseas stocks during the same month, prompting calls from opposition lawmakers for the government to accelerate regulatory reform.

"We are currently consulting with relevant agencies with the goal of completing legislation on virtual assets as soon as possible. We will promptly finalise legislation on stablecoins as soon as possible,"

Yoo Young-jun, Director General of Digital Finance Policy at the Financial Supervisory Service, said.

South Korea's first crypto framework, the Virtual Asset User Protection Act, was enacted in July 2024 and required exchanges to segregate user funds whilst prohibiting wash trading and insider trading.

Phase 2 of the framework will lift a nine-year ban preventing domestic firms from participating in cryptocurrency markets, opening the sector to corporate participation for the first time.

The Financial Supervisory Service is considering excluding US dollar-denominated stablecoins, including Tether (CRYPTO:USDT) and USD Coin (CRYPTO:USDC), from the regulatory framework in favour of Korean Won-denominated alternatives.

South Korea is deepening its Central Bank Digital Currency development in Phase 2, with nine major banks involved in building a wholesale payments layer through Project Hangang.

Approximately 10 cryptocurrency and stablecoin bills are currently under consideration in the National Assembly as part of the broader effort to build the Digital Asset Basic Act legislative framework.

A proposal to introduce a 22% capital gains tax on cryptocurrency profits exceeding 2.5 million Korean Won (approximately US$1,700) per year is set to take effect from January 2027, with its ultimate fate remaining uncertain amid ongoing opposition.

South Korea accounts for 65% of global stablecoin trading volume and ranks second in cryptocurrency adoption across the Asia-Pacific region, behind only India.