South Korean Government Repeals 1950 State Property Act and Enacts 'Framework Act on State Assets'... Accelerating Institutionalization of Digital Economy

On July 15, 2026, the Government of the Republic of Korea announced plans to repeal the State Property Act enacted in 1950 and replace it with the 'Framework Act on National Assets.' This measure is a historic attempt to integrate virtual and digital assets into the state's official asset management system, aiming to completely reorganize South Korea's legal infrastructure to fit the 21st-century digital economic system.

The existing State Property Act, enacted 76 years ago right after the Korean War, focused only on the management of physical assets such as land and buildings, making it insufficient to cover the rapidly changing digital asset market. The government determined that this outdated legal framework hindered the institutionalization of digital assets and efficient national asset management, and decided to clearly include intangible digital assets in the category of national assets.

Replacing the existing State Property Act with the Framework Act on National Assets is intended to reflect the 21st-century asset landscape and introduce modern management practices tailored to new asset classes such as virtual assets and intellectual property (IP).

This legal amendment promoted by the Ministry of Economy and Finance includes significantly expanding the scope of government asset management from real estate-oriented to virtual assets and intellectual property. This signifies that virtual assets are officially recognized not just as a simple investment vehicle but as an economic value that the state must manage and protect, and is interpreted as a measure that leaves open the possibility of the government holding and operating digital assets in the future.

Digital Tokenization of National Resources and Construction of Future Financial Infrastructure

The government plans to promote a pilot project to tokenize and issue government bonds starting in 2027, while also reviewing a tokenization management system for state-owned real estate assets. These plans are closely linked to the Bank of Korea's ongoing Central Bank Digital Currency (CBDC) pilot project and are expected to contribute to enhancing the efficiency of the overall national financial system and increasing trust in the digital asset market.

• Establishment of a pilot issuance and distribution system for tokenized government bonds in 2027
• Development and pilot operation of a tokenization management model for state-owned real estate assets
• Advancement of the national asset settlement system in connection with the Bank of Korea's CBDC pilot

In line with the strengthening legal status of virtual assets, the Supreme Court has established specific procedures for seizing virtual assets during civil and criminal enforcement processes. Following a period of opinion gathering until August 11, 2026, these rules are scheduled to take effect on October 1. Under these rules, courts will exercise clear legal authority to freeze a debtor's assets held in exchanges or temporarily seize digital wallets during litigation procedures.

In the second half of 2026, legislation for the 'Digital Asset Basic Act,' which focuses on stablecoin regulation and mandatory domestic incorporation for foreign issuers, is expected to begin in earnest. In particular, for overseas stablecoin issuers to operate in Korea, they must establish a subsidiary in Korea rather than a simple liaison office, a move interpreted as an effort to enhance domestic investor protection and regulatory effectiveness.

Regarding these rapid institutional changes, the domestic virtual asset industry welcomes the resolution of legal uncertainty but, on the other hand, expresses concern that the strengthened monitoring system could slow down transaction speeds and infringe on market autonomy. In particular, it is pointed out that strengthening reporting obligations for overseas remittances and large-scale asset movements could increase the opportunity costs for investors in a highly volatile market.

Nevertheless, the government emphasizes that establishing this legal foundation is an essential process for securing the trust of institutional investors in the long term and propelling Korea into a global digital finance hub. The digitalization of the national asset management system is expected to become a key driver for strengthening national competitiveness by increasing transparency and maximizing the efficiency of asset management.

These legislative efforts, currently underway as of July 2026, will serve as a cornerstone for the construction of an integrated digital financial system scheduled for 2027. This legal revision, the first in 76 years, is a symbolic event declaring that South Korea has moved away from past analog-style asset management and entered a new era where digital assets become the core of national wealth.