The case for a Korea blockchain framework act has been gaining traction in industry and academic discussion. Korea already has several statutes that touch crypto – the Virtual Asset User Protection Act (가상자산 이용자 보호 등에 관한 법률) for user protection on trading platforms, the Electronic Securities Act (주식·사채 등의 전자등록에 관한 법률) for tokenized securities, and the Act on Reporting and Use of Certain Financial Transaction Information (특정 금융거래정보의 보고 및 이용 등에 관한 법률) for virtual asset service providers. What none of these statutes does is regulate the underlying blockchain technology layer itself: the evidentiary status of a distributed ledger record, the contractual status of a smart contract, or the legal basis for decentralized identity (DID).

Earlier this week the author presented at the National Assembly on why Korea would benefit from a dedicated statute to fill exactly this gap. This post distills the legal core of that argument for a foreign-counsel audience.

One framing note matters before going further. No bill has been formally introduced as a numbered National Assembly bill, and there is no scheduled passage date. What is on the table is a legislative direction being discussed among industry, academia, and policy circles – not pending legislation.

Why a Korea Blockchain Framework Act Is in Industry Discussion

The case for a Korea blockchain framework act rests on three concrete legal gaps that existing statutes do not close.

First, distributed ledger records sit in an evidentiary vacuum. Under the Civil Procedure Act (민사소송법), admissibility and weight of an electronic record are decided through general rules on documentary evidence. Whether a tamper-resistant on-chain record carries any presumption of integrity is decided case by case.

Second, smart contracts have no settled footing in contract law. The Civil Act (민법) was drafted around offer, acceptance, and intent expressed by natural or legal persons. Code that executes irreversibly the moment a condition is met does not map cleanly onto that framework. The Framework Act on Electronic Documents and Transactions (전자문서 및 전자거래 기본법), which has handled paper-equivalent electronic records since 1999 and was renamed in its 2012 revision, is silent on whether a self-executing smart contract satisfies a writing requirement.

Third, DID has no statutory basis at all. The Act on Promotion of Information and Communications Network Utilization and Information Protection (정보통신망 이용촉진 및 정보보호 등에 관한 법률), referred to here as the Network Act, presupposes centralized identity verification agencies and connecting-information (“CI”) infrastructure routed through them. DID’s self-sovereign architecture, where the user holds the credential and presents it directly to a verifier, is not contemplated by the current statute.

Compounding all three gaps, the sectoral statutes above borrow blockchain concepts without defining them. The Virtual Asset User Protection Act, the Electronic Securities Act, and the Specific Financial Transaction Information Act each invoke “distributed ledger” or wallet concepts but leave the definitions to interpretation. The result is that the Ministry of Justice (evidentiary value), the Financial Services Commission (asset character), and the Personal Information Protection Commission (data protection) each read the same technology through their own statutory lens. A single business often has to harmonize three readings to operate. Amending each statute one at a time cannot solve a layer-zero technology gap. That is the structural argument for a general statute.

The Tiered Legal Effect: Non-Discrimination, Presumption, Certification

The substantive heart of a Korea blockchain framework act, as currently discussed, is a three-step structure of legal effect.

The baseline tier is non-discrimination. A record or contract should not be denied legal effect solely because it sits on a distributed ledger or executes as code. This is the same logical move the Framework Act on Electronic Documents and Transactions made for electronic records two decades ago. It is a floor, not a privilege. It does not displace any statute that requires a specific form for validity – it only prevents the technology itself from being a ground for invalidation.

The middle tier is a presumption of integrity, and for smart contracts, treated-as-writing status. If a ledger or smart contract satisfies defined reliability requirements – decentralization of governance, technical integrity, and transparency of operation – then tamper-resistance is presumed in evidentiary proceedings, and the contract may be treated as satisfying writing requirements under the Framework Act on Electronic Documents and Transactions. The EU eIDAS 2.0 regulation reaches a similar result through its “qualified electronic ledger” category.

For smart contracts specifically, the proposed approach is two-track. Track 1 grants non-discrimination across the board. Track 2 grants writing-equivalence only when concrete safety conditions are met: a kill-switch or emergency-stop capability, a security audit or formal verification, and an identifiable developer or operator. The U.S. UCC Article 12 “controllable electronic records” rules reflect a comparable layered logic on the asset-control side.

The top tier is certification or rating – a market-facing trust mark that lets counterparties distinguish reliable infrastructure from unreliable infrastructure without each party auditing the chain themselves.

One drafting choice deserves emphasis. The reliability criteria themselves would be delegated to subordinate regulation – presidential decree and ministerial notice – rather than fixed in the statute. Hard-coding consensus mechanisms or audit standards into primary legislation freezes the framework against a technology that moves faster than the legislature.

Defining the Building Blocks: Distributed Ledger, Smart Contract, DID

A framework act is, in the end, only as useful as its definitions. The defined terms set the scope of every downstream statute, decree, and ministry interpretation that will refer back to it. Three design principles should govern the definition section.

The first is technology neutrality. The definition of “blockchain” or “distributed ledger” should not hard-code a particular consensus algorithm or a particular network topology. A statute that names proof-of-work or proof-of-stake will be obsolete before its third anniversary. The EU’s MiCA regulation and the U.S. CLARITY Act discussions both grapple with the same neutrality problem.

The second is consistency with definitions already used in the Specific Financial Transaction Information Act, the Personal Information Protection Act, and the Network Act. Korea cannot afford to have four mutually inconsistent statutory definitions of the same technology. The framework act should be the reference definition, and downstream statutes should align over time.

The third is extensibility. The defined terms need to accommodate token types and identifiers that did not exist when the bill is drafted – non-fungible tokens, soulbound tokens, AI-agent identifiers, and whatever comes next. Closed enumerations age badly.

Applied to specific terms, the core defined concepts for a Korea blockchain framework act would include: blockchain and distributed ledger (technology-neutral), smart contract (code-executed agreement), DID (distributed-ledger-based self-sovereign identity), token as an umbrella category that covers virtual assets, NFTs, and SBTs without privileging any sub-type, and DAO (the legal status of decentralized autonomous organizations).

DID deserves a closer look because it is the area furthest from current Korean statute. The international model assigns three roles: the issuer who creates a verifiable credential, the holder who controls it in a wallet, and the verifier who checks it. The framework act would need to identify each role and the duties attaching to it, and to interface with Korea’s existing personal-identity-verification regime under the Network Act – because in many use cases such as opening a bank account or accessing a regulated service, a DID credential must slot into a process that already requires verification through a designated agency. A further legislative question is whether non-human entities such as IoT devices and AI agents should be assignable DIDs, and on what conditions.

How Cha & Kwon Advises on This

Foreign businesses building on Korean blockchain infrastructure, tokenized-asset issuers preparing for the STO regime, and DID solution providers should be tracking the framework-act discussion now. If a framework act is enacted, it would reshape the practical compliance baseline that every cross-border project in Korea operates under. Cha & Kwon has project management experience on Korean blockchain legislative-policy work and continues to follow the framework-act discussion as it develops.

For a wider view of how the proposed statute would fit alongside existing rules, see our hub on Korea’s crypto regulatory framework. Issuers thinking about cross-border listing structures may also find our note on Korean legal opinion letters for exchange listings useful.

Cha & Kwon Law Offices advises virtual asset businesses, fintech companies, and foreign investors on Korean regulatory compliance. For consultation, contact us at contact@chakwon.com or visit chakwon.com.

This article provides general legal information and does not constitute legal advice for your specific situation. Please consult qualified Korean legal counsel regarding your particular circumstances.

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