The South Korean authorities plan to apply currency regulation rules to stablecoin transactions. The initiative aims to strengthen control over digital assets in line with international standards.
South Korea’s Ministry of Economy and Finance is analyzing measures to ensure the reliability of stablecoin transactions. According to local media, authorities are considering introducing new regulatory rules as stablecoins are actively being used for cross-border transfers.
A Ministry representative noted that the functionality of stablecoins is expanding, making them commonly used as a means of payment in the real economy. Therefore, the government must apply a regulatory approach to stablecoin transactions similar to that used for foreign currency operations.
Moreover, the Financial Services Commission (FSC) of South Korea intends to hold a series of consultations with financial market regulators in Japan and the European Union. The purpose will be to harmonize approaches to the regulation of stablecoins across different jurisdictions.
Stablecoin market regulation in South Korea will primarily affect stablecoins pegged to the Korean won. Authorities plan to establish a system for issuing coins tied to the national currency, which will be a foundation for regulating tokens linked to foreign currencies. The Ministry of Economy and Finance is paying special attention to stablecoins pegged to the U.S. dollar, believing that their use negatively impacts the country’s monetary sovereignty.
According to CryptoProcessing.com analysts, stablecoins account for a significant and growing share of the total volume of crypto transactions, which, moreover. In January 2023, they amounted to 66%, rising to 78% by December of the same year. On average, stablecoins represented 73% of the total volume of crypto transactions in 2023. Visa’s data tracker reports that stablecoin transaction volume totaled $1.6 trillion between September 8 and October 8, 2024.
The South Korean authorities are developing regulatory norms for the cryptocurrency market since 2022. Over the past two and a half years, they introduced strict requirements for local crypto companies and digital asset service providers, adopted a crypto tracking system, approved legislative act on cryptocurrencies, and the Korea Financial Intelligence Unit (KoFIU) tightened oversight of local crypto exchanges. South Koreans are also banned from using credit cards to buy digital assets on foreign crypto exchanges.
