South Korea Introduces Cryptocurrency Bill Regulating Stablecoin Issuing

The regulation aims to legitimize digital assets, fostering a stable environment while stirring competitiveness concerns among local crypto businesses.

The South Korean Proposal

The South Korean proposal led by Min Byeong-deok introduces a framework under the “Digital Asset Basic Act” requiring stablecoin issuers to have a minimum of 500 million Korean won in capital. This marks a significant step in Korea’s regulatory landscape. Supported by President Lee Jae-myung, the bill assigns oversight to the Financial Services Commission for these licensing processes. Min Byeong-deok stated, “The proposed Digital Asset Basic Act will lay the groundwork for a comprehensive regulatory framework that aims to foster innovation while ensuring consumer protection.” While intending to stabilize the market, it faces criticism regarding potential uneven competition with foreign companies by local industry insiders.

Global cryptocurrencies like USDT and USDC may encounter minimal scrutiny due to their offshore status, potentially skewing competitive dynamics. The increased legitimacy and regulatory clarity aim to boost market confidence and promote innovation, especially in won-based stablecoins. Historically, similar regulations in other regions have led to increased institutional interest and activity in the market.

Potential impacts include a boost in local stablecoin issuance and a robust on/off-ramp for digital assets within South Korea. The new regulations incorporate lessons from previous attempts at financial oversight, paralleling EU’s MiCA framework, and establishing a compliant infrastructure for digital asset growth and investment security.