National Assembly Political Circles Lock Horns over Criminal Procedure Act Amendment and Second-Stage Digital Asset Legislation

Intersection of Investigative Authority Adjustment and Cryptocurrency Regulation

On the 21st, the National Assembly's political circles were locked in acute conflict over the amendment to the Criminal Procedure Act and the second-stage legislation of the Digital Asset Basic Act (tentative title). The opposition party is pushing for a revision of the Criminal Procedure Act to completely abolish the prosecution's supplementary investigation authority, while simultaneously introducing a provision granting police independent emergency arrest powers. At the same time, coinciding with the integration of Naver Financial and Dunamu, the second-stage legislation—aimed at resolving regulatory uncertainty for virtual asset operators—is also pending before the plenary session. The confrontation between the ruling and opposition parties, which emerged during the handling of the extension of the independent counsel investigations (the year's biggest national agenda), appears to be expanding into a new legislative issue.

The intensifying controversy over the "legislative rush" is underpinned by political calculations ahead of the June 3 local elections. Recently, as the bill to extend the comprehensive independent counsel's term by 30 days was put to a plenary vote, the ruling party engaged in an extreme standoff with the Rebuilding Korea Party over measures to forcibly end the filibuster. In this process, discussions regarding the Criminal Procedure Act, which seeks to readjust investigation powers between the prosecution and the police, have emerged as a central point of contention. This is being interpreted not merely as an institutional improvement, but as an attempt to fundamentally alter the power structure of the judicial system, thereby igniting political friction.

Core Issue: Establishment of Police Emergency Arrest Powers and Abolition of Prosecution Supplementary Investigation Authority

Under Article 200-3 of the current Criminal Procedure Act, if the police make an emergency arrest, they must subsequently obtain approval from a prosecutor. This has functioned as a device to limit the independence of investigations while checking potential police abuse. However, the amendment proposed by the Democratic Party of Korea completely removes this requirement for prosecutor approval, allowing the police to execute arrests independently without prosecutor intervention. Coupled with the abolition of supplementary investigation authority, this effectively grants the police powerful independent investigation rights.

Proponents of the system emphasize the efficiency of the judicial economy. They argue that omitting the redundant prosecutor approval process significantly enhances on-site response capabilities and has the practical effect of swiftly suppressing crimes where there is a risk of evidence destruction. Conversely, criticism is also fierce. Some in the legal community point out that if the prosecution's control mechanism disappears, there is a high risk of arbitrary police crackdowns and human rights violations. The core argument against the bill is that beyond the principle of separating investigation and prosecution, the power of the police, a state authority, could become excessively bloated.

Second-Stage Digital Asset Legislation and Market Ripple Effects

Parallel to the Criminal Procedure Act controversy, discussions on the second-stage Digital Asset legislation, intended to open up the industry, are also gaining momentum. While the first-stage legislation dealt with basic regulations for virtual assets, the current second-stage bill focuses on clarifying institutional details, such as market exit requirements for operators facing severe capital erosion and regulations on token issuance. A ruling party official involved in the discussions revealed that the direction of the bill, previously vague, is now taking concrete shape. This is serving as a positive signal for market participants.

The urgent passage of this bill is directly linked to the launch of large-scale holding company structures, such as the merger between Naver Financial and Dunamu. Without regulatory transparency, investment and M&A strategies by major platform companies will inevitably be postponed indefinitely. If uncertainty is resolved, it is expected that additional investment worth hundreds of billions of won could flow into the domestic blockchain industry ecosystem, creating derivative economic value. Establishing clear virtual asset exit criteria is expected to expedite the market screening process, thereby achieving the original goal of investor protection.

Legislative Schedule and Future Political and Industrial Outlook

The National Assembly's legislative process ahead foreshadows extreme political rifts. The opposition party prioritizes the passage of the comprehensive independent counsel extension bill under the pretext of clarifying the insurrection, intensifying its criticism against the ruling party's attempts to block it as a "legislative rush." If no agreement is reached between the two sides, the Criminal Procedure Act amendment and the second-stage Digital Asset legislation are also likely to face significant difficulties during the plenary vote. If a parliamentary stalemate, such as a filibuster, persists, the final handling of these agendas may be postponed until after the June 3 local elections.

If the political circle does not ignore market demands, the Digital Asset Act could be the first to reach a resolution through active mediation by economic ministries. On the other hand, the issues of police emergency arrest powers and the abolition of supplementary investigation authority are expected to require time for public hearings and expert opinion gathering at the Legislation and Judiciary Committee level. Whichever bill crosses the National Assembly threshold first, that decision will serve as a critical watershed that simultaneously shakes the power landscape of the South Korean judicial system and the map of the multi-trillion-won financial industry.