Digital Asset Basic Law to be Processed Within the Year, Realistic Deadline is 'November'

The government plans to submit the proposal in November and aims for it to pass in December, but the schedule for the bill subcommittee has not been announced.

The deliberation period for the proposed law is 20 days, and the later the submission, the more challenging it becomes to process it within the year.

There is a possibility of merging with existing proposals for review, and coordinating key issues will be crucial.

[Block Media Reporter Oh Su-hwan] Kim Min-seok, the leader of the Democratic Party, officially proposed to the government a postponement of income taxation on digital assets (virtual assets), making the enactment of the Digital Asset Basic Law within the year a key issue.

The Democratic Party has set a goal of processing the bill in December, but with delays in the submission of the government proposal, the remaining legislative schedule is tight. Considering the deliberation period for the proposed law and the regular National Assembly session, it is expected that the success of the bill will depend on starting the subcommittee review and resolving issues in November.

Democratic Party Leadership: "We Need an Adjustment Period After Enacting the Basic Law"... Weight on Two-Year Postponement Theory

During a Supreme Council meeting held on the 4th, Kim stated, "I officially propose to the government a postponement of income taxation on digital assets," citing the enactment of the basic law as the basis for the postponement. He said, "After comprehensively considering the principles of taxation, domestic industrial conditions, and fairness among users, we have come to the conclusion that it is desirable to first enact the Digital Asset Basic Law to establish an overall framework and provide an adjustment period for businesses and investors."

The leadership's decision reflects the party's internal 'precedence of the basic law' formed around the Finance Committee. Democratic Party members of the National Assembly's Finance and Economy Planning Committee decided on the 3rd to convey their opinion for an additional postponement of taxation to the leadership. O Gi-hyung, the ruling party's secretary of the Finance Committee, explained that considering the need to secure overseas transaction information and the market environment changes due to the enactment of the basic law, time is needed to organize the taxation system.

Democratic Party member Min Byung-deok also emphasized during a National Assembly forum on the 2nd that taxation should be postponed after first enacting the basic law and setting preparation items and deadlines.

With the postponement policy established, the remaining issue is the duration. Within the party, a two-year postponement is being strongly discussed. If the two-year postponement is confirmed, the scheduled implementation date for taxation in January next year will be pushed back to January 2029. The government and the ruling party are expected to review the income tax law amendment in the Tax Subcommittee of the Finance Committee after consulting on the postponement period and push for a resolution in the plenary session by the end of the year.

Delay in Submission of Government Proposal... '20-Day Deliberation Period' is the First Hurdle

Unlike the income tax law amendment, which has a schedule for review in the Tax Subcommittee this month, the basic law, which is a prerequisite for the postponement, has not even had the government proposal submitted to the National Assembly yet. The Financial Services Commission announced on September 22 that it would prepare the government proposal aiming for discussions in the November Political Affairs Committee's bill review subcommittee. However, the submission has been delayed due to prolonged consultations with related agencies, and the schedule for the bill subcommittee review has not been set.

The ruling party still emphasizes the importance of processing it within the year. Democratic Party member Lee Kang-il, who is part of the Political Affairs Committee, stated, "The government authorities, namely the Financial Services Commission, say they will provide the government proposal in November," and added, "We will try to pass it by December."

However, considering the deliberation period after the submission of the government proposal, there is not much time left for processing it within the year. According to Article 59 of the National Assembly Act, a proposed law must be presented at least 20 days after it has been referred to the standing committee. Even if the government proposal is submitted in mid-November and immediately referred, the presentation time will extend into early December.

There is room to shorten the deliberation period. The National Assembly Act provides exceptions that allow the deliberation period to be waived with committee approval in cases of urgent and unavoidable reasons. However, since the basic law is a proposed law with unresolved key issues such as the issuing entities of stablecoins and the governance structure of exchanges, it is not easy to apply the exception. The delay in submitting the government proposal is also due to differences among related agencies, making it weak to argue for urgency to expedite the review.

A more realistic path than the exception for the deliberation period is to merge the review with existing proposals. If the government proposal is directly related to the proposals being reviewed in the Political Affairs Committee, it can be reviewed together in the subcommittee after discussions between the chair and the secretary.

There are already several proposals in the National Assembly that could be merged. These include bills regulating the issuance and distribution of digital assets and stablecoins, with the 'Law on Digital Asset Markets and Digital Asset Industries' proposed by Democratic Party member Jeong Tae-ho being referred to the Political Affairs Committee on the 30th after being introduced on the 29th of last month.

Draft Review and Regular National Assembly Session... Agreement on Key Issues is Crucial

Even if the bill subcommittee clears the hurdle of merging reviews, there are still the full meetings of the Political Affairs Committee, the system and wording review by the Legislation and Judiciary Committee, and the resolution in the plenary session to follow. Proposed laws referred to the Legislation and Judiciary Committee also generally have a 5-day deliberation period applied. There are procedures that cannot be omitted due to the nature of the proposed law. While public hearings can be omitted by committee decision, the detailed review of each provision cannot be skipped.

In a situation where there are many procedures left, the regular National Assembly session is another constraint. This year's regular National Assembly session ends on December 9. To process it within the session, the government proposal must be submitted and the resolution in the plenary session must be completed within just over a month. If an extraordinary National Assembly session is convened in December, reviews can continue until the end of the year, but the convening and the schedule for the plenary session must be coordinated separately.

In terms of content, there are still significant differences in opinions on the details. There are disagreements on whether to limit the issuing entities of the won stablecoin to banks or how far to allow participation from non-bank businesses. There are also differences between the government and the industry regarding restrictions on the shareholding of major shareholders in exchanges. If the government proposal contains different regulatory directions from existing proposals, more time may be needed for adjustments during the merging review process.

Ultimately, the processing of the basic law within the year depends on the submission of the government proposal in November and the progress of the bill subcommittee review. If the government proposal is submitted this month and the merging review with existing proposals is significantly advanced, it can push for a resolution in the Political Affairs Committee and the Legislation and Judiciary Committee and present it in the plenary session in early December. On the other hand, if the submission of the government proposal is delayed until the end of November or if there is a delay in reaching an agreement on key issues, the legislative schedule is likely to be postponed to January or February next year.

The Democratic Party, which presented the enactment of the basic law as the basis for the postponement of taxation, will be crucial in how specifically they can clarify the timing of the government proposal submission and the National Assembly review schedule in the future.

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