South Korea is formulating new regulations for stablecoins with a focus on cross-border transactions. The country's Ministry of Strategy and Finance will reassess strategies to ensure the reliability of digital asset transfers across borders.

New Regulations for Stablecoins

South Korea has shown interest in applying foreign exchange regulations to dollar-pegged stablecoins. The Ministry emphasized that these assets facilitate cross-border transactions and transfers, potentially requiring specific guidelines. The country's regulator, the Financial Services Commission, plans to prioritize stablecoins in the second legislative stage of the Virtual Asset User Protection Act. The commission intends to engage with similar overseas bodies, including Japan and the European Union. However, specific timelines for these consultations have not been provided.

Virtual Asset User Protection Act

The Commission notes: “We plan to consult with relevant ministries by referring to legislative cases in Japan, the European Union, etc.” New stablecoin reforms will begin with legal tokens tied to the South Korean Won.

Supervisory Fees for Crypto Exchanges

In August, South Korea enacted the Virtual Asset User Protection Act, requiring crypto exchanges like Upbit, Bithumb, and Coinone to pay supervisory fees based on operating revenue. The Financial Services Commission (FSC) also announced that, under the new act, virtual asset operators will start paying their supervisory fees on January 1st, 2025. Operators' fees will depend on their operating incomes from the previous fiscal year. The new act also mandates crypto exchanges to maintain at least 80% of users' assets in cold storage, kept separately from the exchange's funds. Assets should also be invested in 'risk-free' assets. Additionally, exchanges will review listed assets, examining their circulation and whitepapers, and will de-list assets failing to meet given criteria.

South Korea aims to establish a robust regulatory framework for stablecoins to enhance security and transparency in cross-border digital transactions.