South Korea's financial regulator calls for debate on rules governing perpetual futures

As interest in perpetual futures — commonly known as "perps" — grows in digital asset markets, a South Korean financial regulator official said the country needs to discuss how to regulate them. The question, the official said, is whether the unique structure of perps, which carry no expiration date, can be managed under the existing regulatory framework.

Shim Won-tae, an official at the Financial Services Commission's virtual assets division, made the remarks Monday afternoon at a judicial capacity-building program held at the Seoul Southern District Court. "Perpetual futures are an area that requires discussion," Shim said. "While standard futures require periodic settlement, perpetual futures use a separate mechanism called a funding rate to keep positions open indefinitely — and whether to treat and regulate them as traditional derivatives is something we need to discuss."

Perps are derivative instruments in the form of futures contracts with no expiration date. Investors can profit or lose through derivative positions that bet on price direction without holding the underlying asset. Trading in perps is currently active on major global centralized exchanges such as Binance and OKX, as well as on decentralized exchanges.

Shim, who delivered a lecture on second-phase virtual asset legislation — also referred to as an omnibus law — introduced eight bills proposed in the National Assembly to date, along with legislative trends from abroad. "South Korea currently has its rules spread across separate laws, including the Act on Reporting and Using Specified Financial Transaction Information and the Virtual Asset User Protection Act, whereas most other countries are developing unified regulatory frameworks for digital assets themselves," he said.

The EU enacted a unified single law known as MiCA, which has been in effect since December 2024. Japan has regulated stablecoins by amending its Payment Services Act — a law similar in character to South Korea's Electronic Financial Transactions Act — but is now moving to keep only stablecoins under that law while shifting other digital assets to the Financial Instruments and Exchange Act. The United States, which had managed payment services under varying state laws, enacted the GENIUS Act last year, with implementation set for January next year.

Shim identified industry classification as one of the key issues in the omnibus law debate. "The Capital Markets Act defines categories such as investment trading, investment brokerage and trust services," he said. "How to build a corresponding industry classification system for the digital asset sector is an important question."

Among the bills proposed so far, some classify operators by license type — distinguishing between authorization, registration, notification and designation — while others propose a two-tier structure of authorization and registration. Shim said sufficient discussion is needed on how to compare and align newly proposed business concepts with the existing financial regulatory framework as operators' activities are broken down in greater detail.

Custody and deposit rules were also cited as major challenges. Shim noted that following the Bithumb overpayment incident this year, the financial authorities announced a set of reform measures — including monthly inspections by external bodies and the establishment of risk management standards to be overseen by an internal control committee. "When the second-phase legislative discussions take place, provisions that require legal force rather than self-regulation are expected to be incorporated," he said.

Shim also shared views on stablecoins. "The current function of stablecoins is as a means of payment in virtual asset transactions, but their potential use in payment and settlement by leveraging the advantages of distributed ledgers is also being discussed," he said. He added that Tether and Circle together account for about 90 percent of the dollar stablecoin market, with Tether holding the largest issuance volume and being used across multiple areas including decentralized finance and perpetual futures.

Shim said the global debate on regulating decentralized finance is also shifting. "In the past, there was a view that DeFi was difficult to regulate because it was hard to determine who operates it, which country it belongs to, or even resolve questions of jurisdiction," he said. "But recently, discussions on how to regulate DeFi have been taking shape in a more concrete way."

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