South Korea is taking significant steps toward establishing a clear regulatory framework for stablecoins. The Financial Services Commission (FSC) is set to unveil a bill this October as part of new guidelines designed to enhance the issuance, collateral management, and internal systems for stablecoins. This move underscores South Korea’s commitment to staying at the forefront of cryptocurrency regulation.
What is Driving the Need for Stablecoin Regulation in South Korea?
The discussion around stablecoin regulation has gained momentum since South Korean President Lee Jae-myung pledged support during his campaign. Lawmakers have been actively submitting proposals, including the ‘Digital Asset Basic Act’ and the ‘Act on Payment Innovation Using Value-Pegged Digital Assets.’ These efforts aim to reduce the country’s dependency on dollar-based stablecoins such as Tether.
In June, major South Korean banks expressed their intent to launch a won-backed stablecoin by late 2025 or early 2026. The idea is to promote stability in the nation’s financial system and counteract the growing dominance of dollar-pegged stablecoins, which currently make up 99.8% of the market.
What Does the New Law Cover?
The anticipated bill will propose clear guidelines for:
- Issuing stablecoins backed by the South Korean won.
- Safeguarding collateral assets for these digital coins.
- Implementing robust internal control systems for financial institutions.
The FSC has been working on this initiative since 2023 as part of its Virtual Asset User Protection Act. The guidelines are expected to bring greater transparency and credibility to the cryptocurrency industry in South Korea.
Fighting Tax Evasion with Cryptocurrency Management
Beyond stablecoin regulation, South Korean authorities have been cracking down on tax evasion via cryptocurrencies. Recently, authorities in Jeju City froze and seized digital assets worth millions from individuals suspected of using crypto to bypass tax requirements. This measure aims to reinforce legal compliance among crypto users.
How This Impacts the Global Crypto Landscape
With the United States and other major economies ramping up their stablecoin regulations, South Korea’s efforts highlight the urgency for countries to establish localized frameworks. By introducing a won-pegged stablecoin, South Korea could set a precedent for other nations exploring sovereign-backed tokens.
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