South Korea’s Ruling, Opposition Parties Clash Over Stablecoin Regulation

South Korea’s ruling and opposition events filed dueling stablecoin laws on Monday, organising a parliamentary battle over crypto regulation because the nation seeks to determine its place within the world crypto economic system.

Democratic Get together lawmaker Ahn Do-geol has submitted complete laws for won-pegged stablecoins that explicitly ban curiosity funds. On the similar time, the ruling Individuals Energy Get together’s Kim Eun-hye filed competing laws that omits any point out of a prohibition on curiosity.

Each payments grant emergency powers to monetary regulators, with the Financial institution of Korea licensed to request knowledge and conduct inspections supporting financial coverage.

The legislative conflict comes as President Lee Jae-myung pushes a crypto-friendly agenda and world powers race to manage stablecoins, which have emerged as mainstream cost strategies attributable to decrease transaction charges and near-instant settlement.

“Korea’s stablecoin regulation requires a balanced method that mixes important authorities oversight with substantial personal sector freedom,” Wealthy O., APAC regional supervisor at {hardware} pockets firm OneKey, instructed Decrypt.

“Whereas authorities management is important for financial sovereignty, shopper safety, and systemic danger administration, extreme restrictions might undermine Korea’s competitiveness within the world digital asset panorama,” he mentioned.

Ahn’s invoice imposes stricter necessities, mandating stablecoin issuers acquire Monetary Providers Fee approval and keep a minimal capital of $3.6 million (5 billion received). 



“This invoice stems from discussions throughout the DP’s Committee on Future Financial Progress Technique and displays President Lee’s marketing campaign pledge,” Ahn mentioned, in line with Korea Joongang Every day.

All tokens have to be totally backed by high-liquidity belongings, with curiosity funds explicitly banned, in line with the invoice textual content.

Kim’s laws focuses on licensing necessities and complete disclosure obligations, mandating the submission of whitepapers and product descriptions for stablecoin issuers.

Her invoice goals to “promote innovation in digital asset funds” and “improve the reliability of the digital asset market,” in line with the legislative textual content.

Reserve necessities and protections

The Democratic Get together proposal requires 100% backing by means of money, demand deposits, authorities bonds, or municipal bonds. 

In chapter situations, reserve belongings could be prioritized for person reimbursement inside three enterprise days and “can’t be seized or used as collateral,” Ahn reportedly mentioned.

“Just like the U.S. with its digital greenback, Korea should enter a brand new period of economic sovereignty with a won-based stablecoin,” he mentioned.

The Individuals Energy Get together invoice contains provisions for “issues associated to the redemption of fixed-value digital belongings and the composition and administration of reserve belongings,” together with necessities for issuers to keep up monetary and administration soundness. 

Financial institution of Korea Governor Rhee Chang-yong confirmed help for won-backed stablecoins final month whereas emphasizing the necessity to study their impacts on overseas trade administration.

“The regulatory framework ought to give attention to outcomes quite than prescriptive strategies,” Wealthy O. mentioned, advocating for clear requirements whereas permitting innovation in yield mechanisms and cross-border performance.