South Korea is beginning to implement new stablecoin regulations that may affect financial stability and the protection of the country's currency.
Central Bank Goes Slow and Steady
The initial regulatory plans for Korean stablecoins focus on restricting issuance solely to tier-one commercial banks. Non-bank fintechs are expected to be admitted only after successful completion of stress tests. Senior Deputy Governor Ryoo Sang-dai emphasized that such a cautious approach is necessary to prevent financial risks.
Banks Team Up for Won-Linked Tokens
Eight leading banks, including KB Kookmin and Shinhan, have teamed up to test two deposit-linked and trust-based models that align with the new regulations. This move aims to reclaim market share from dollar-pegged coins, while also opening opportunities for new stable payments without draining won liquidity.
Legislators Seek Checks and Balances
The Digital Asset Basic Act, currently under discussion in the National Assembly, introduces key regulations for stablecoins, including capital requirements and reporting standards. Debates continue regarding whether the primary oversight should fall to the Financial Services Commission or the central bank. Opposition seeks to impose foreign ownership caps to safeguard the financial system.
In the next six months, South Korea must balance the potential for innovation with the need for regulation, which could position the won as a key player in the digital asset market and counter the dollar's dominance.
