South Korea's Kospi has entered a technical bear market with a 20% decline from recent peaks, while Tokyo's Nikkei 225 continues sliding near multi-month lows as the AI trade unwinds across Asia's major economies. The crisis stems from outstanding leveraged bets hitting a record 29.2 trillion won ($19.7 billion) in early July, with retail investors piling into single-stock ETFs tied to Samsung Electronics and SK Hynix using borrowed money. As reported by Shenwan Hongyuan Group's Jin Qianjing, Korean stocks could amplify sentiment across global technology markets given their high leverage, drawing uncomfortable comparisons to China's 2015 meltdown when margin debt preceded a trillion-dollar market collapse.
South Korea has unveiled plans for a new National Asset Basic Act that will bring cryptocurrencies and other digital assets into the country's state asset management framework, expanding rules that have remained largely unchanged for more than seven decades. As reported by the Ministry of Economy and Finance during a July 15 policy briefing at the President's Blue House, the ministry confirmed it will introduce this legislation to replace the existing State Property Act enacted in 1950. The current law was designed for an economy where government assets were largely limited to real estate, but the proposed framework will cover newer categories including intellectual property and virtual assets, while introducing specialized management and development standards for different types of state-owned assets. Under the proposal, authorities plan to move away from treating public assets mainly as property to preserve, sell, or develop, instead focusing on creating more value from government-owned assets through modern management practices. The government has formalized its policy to foster ecosystems related to blockchain and digital assets through the "Economic Growth Strategy in the Second Half of 2026" and announced detailed plans to incorporate and innovate the digital asset market through a Cabinet meeting on July 14.
Japan's parliament passed amendments to the Financial Instruments and Exchange Act on July 15, marking a significant shift in crypto classification. The reform classifies crypto as financial products rather than payment tools, aligning them with stocks and bonds, introducing insider trading bans, issuer disclosures, and penalties of up to 10 years in prison. The package establishes a flat 20% tax expected from January 2028, replacing rates that climbed toward 55%. As reported by XWIN via CryptoQuant, the reform does not classify Bitcoin or Ethereum as securities but recognizes crypto assets as investment products with investor protection, disclosure requirements, and market surveillance similar to traditional financial markets. Domestic spot crypto ETFs become legally possible under the new framework, with exchanges reportedly eyeing first listings around 2027, though approval remains uncertain.
South Korea has unveiled a pilot program to tokenize government bonds on a blockchain linked to the Bank of Korea's wholesale central bank digital currency (CBDC). As reported by Yonhap Infomax, the initiative was announced during a cabinet meeting on July 14 as part of the government's broader 'Economic Growth Strategy for the Second Half of 2026'. The pilot program aims to test the efficiency, security, and transparency of distributed ledger technology in sovereign debt markets, potentially reducing settlement times and operational costs compared to traditional systems. The government has decided to push for a demonstration project to tokenize government bonds in 2027 in connection with the Central Bank Digital Currency (CBDC) for institutions operated by the Bank of Korea. The Bank of Korea has also decided to consider ways to secure interoperability to link CBDC infrastructure and other private blockchains, with attempts to incorporate distributed ledger technology into the government bond market taking shape.
While maintaining blockchain development as part of its economic strategy, South Korea's second-half strategy places stronger emphasis on artificial intelligence. As reported by the Ministry of Economy and Finance, the government has designated physical AI, AI data centres, and semiconductors as South Korea's three national 'Mega Projects'. The government will invest 800 trillion won (about $535.6 billion) to build semiconductor fabrication facilities in the country's southwest, creating a second manufacturing base alongside existing plants in the capital region, with officials expecting memory chip production capacity to double within five years. The latest proposal follows another digital asset policy update released earlier this week, with the ministry confirming that blockchain development will remain part of South Korea's economic growth strategy for the second half of 2026, even as artificial intelligence receives a larger share of government investment.
The proposal marks a philosophical shift from previous crypto rules that concentrated on investor protection and exchange oversight to recognizing digital assets as national property integrated into the country's long-term financial infrastructure. South Korea handles an estimated 15% to 20% of global crypto trading volume, with more than 18 million local participants, making it one of the world's most active crypto markets. According to CoinGecko data, average monthly trading volume in KRW fell by 21.7% from Q4 2025 (125.2 trillion won) to Q1 2026 (98.1 trillion won), indicating funds are shifting away from retail speculation toward institutional settlement infrastructure. The legislation will govern approximately 1,400 trillion won in state holdings, equivalent to nearly $940 billion, with the new model prioritizing value creation over simple custody of public property. Implementation details remain pending, including how the state would acquire, custody, or value its future digital holdings over time.
