Pass the framework, test the restrictions
For Korean policymakers, the U.S. Senate’s failure on Sept. 15 to advance the proposed CLARITY Act, which would establish a federal regulatory framework for digital assets and clarify the respective roles of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), deserves attention. The immediate setback was American, but the legislative risk is familiar in Seoul.
The bill fell short of the 60 votes needed to proceed after years of industry demands. The House had passed an earlier version, and senators had spent months revising it. With the midterm elections approaching, the bill's future remains unclear and the outcome is regulatory uncertainty.
Without legislation, firms remain dependent on SEC and CFTC interpretations that may change under future administrations or court challenges. For Korea, the useful lesson concerns the way a digital asset law should be built. A statute gives companies firmer ground for hiring, investment and product development.
The proposed law's value lay in its breadth. Token classification, SEC and CFTC jurisdiction, custody and intermediary obligations have to work together. A company gains little from knowing how its token is classified if it still cannot identify the license, custodian or trading venue it needs. The bill sought to replace that sequence of legal guesses with a functioning market framework. Its integrated structure answered a practical industry problem.
The GENIUS Act has already given the United States a federal framework for payment stablecoins. The proposed CLARITY Act was meant to fill the wider market-structure gap. The final Senate draft also carried disputes over stablecoin rewards, bank funding and ethics rules for public officials. Its sponsors made 126 substantive changes after more than a year of negotiation. It retained support from such crypto companies and major financial institutions including BlackRock, Fidelity and SoFi. Still, the architecture collapsed on one procedural vote.
There is a political lesson to be learned here. Congress should preserve the bill’s core structure when it returns to the issue. Narrower disputes can be settled through focused negotiation or provisions with scheduled review. Reopening the basic division of authority and the rules for market intermediaries would restore the uncertainty that the bill was designed to end.
Korea should study this failure closely. The Financial Services Commission (FSC) deserves credit for treating market expansion and risk management as parallel goals. Participants in its March Virtual Asset Committee meeting also called for rules that allow diverse business models. The gradual opening of corporate trading is another useful step. Korea’s next law should turn those signals into an industry framework for issuance, custody, brokerage and settlement, with rules tied to the activities a firm performs. The framework should give corporate users a predictable route into the market. Institutional demand is essential for domestic custody, treasury and settlement services to scale beyond pilot projects.
Two unsettled questions could now consume the broader bill. The FSC’s committee has discussed requiring banks to hold 50 percent plus one share in a won stablecoin issuer, as well as ownership-dispersion requirements for crypto exchanges. These are still matters under discussion. On Aug. 27, the FSC clarified that no exchange shareholder cap had been finalized. That caution is welcome. Either measure could reshape competition before Korea has learned which business models can operate safely.
The hard part of a won stablecoin is the won: keeping redemption at par during periods of stress. A bank shareholder may add credibility, but ownership alone cannot guarantee sound reserves, prompt redemption or resilient technology. The law should set demanding, technology-neutral standards for reserve assets, segregation, audits, cybersecurity and operational continuity. Banks and qualified technology companies that meet those standards should have a path to compete. Regulation would then reward proven capability, regardless of institutional label.
Exchange rules should follow the same logic. A mandatory ownership cap could force restructuring and deter investment without directly improving customer-asset protection.
Rules on segregation, conflicts of interest, market surveillance, capital and cybersecurity address those risks more directly. Before limiting ownership, policymakers should identify the problem, explain why existing regulatory tools are inadequate and show how the proposed cap would produce a better outcome.
The National Assembly should pass the enabling framework promptly. Asset classification, activity-based licensing, custody, disclosure and market-conduct rules belong in a common legal spine. Contested structural restrictions can carry pilot periods, mandatory reviews or sunset provisions. This would prevent one unresolved rule from delaying certainty across the sector. It would also place the burden where it belongs: A restriction that narrows entry and competition should demonstrate a measurable public benefit.
Speed now has competitive value. Clear, activity-based rules would give Korean firms room to build custody, payments and tokenization services at home. They would also be easier to compare with U.S. rules, reducing compliance costs for firms operating in both markets. Prolonged uncertainty risks sending product development and capital toward jurisdictions that already offer a credible licensing path.
The CLARITY Act vote gives Korea a timely warning. A necessary market framework can be delayed when every unresolved issue becomes a condition of passage. Seoul still has time to avoid that outcome. The National Assembly should pass a coherent framework that gives firms room to build, while requiring each permanent restriction to prove its value.
Daniel Castro is president of the Information Technology and Innovation Foundation (ITIF), a leading science and technology policy think tank, and founder and director of ITIF’s Center for Data Innovation. Kim Se-jin is a tech policy analyst at ITIF’s Center for Korean Innovation and Competitiveness.