South Korea is encountering significant hurdles in establishing a regulatory framework for stablecoins, as ongoing debates among lawmakers and financial authorities continue to stall progress. Central to this issue is the Bank of Korea”s (BOK) insistence that stablecoin issuers be primarily owned by banks, which has sparked a contentious dialogue regarding the roles of banks and technology firms in the stablecoin space.
The BOK has maintained that any stablecoin issuer must have at least 51% ownership by a consortium of banks. This requirement is designed to address concerns about financial stability and compliance with anti-money laundering regulations. The central bank argues that only banks possess the necessary regulatory oversight and expertise to manage the risks associated with stablecoins adequately.
Conversely, other regulators, such as the Financial Services Commission (FSC), are advocating for a more inclusive regulatory environment that would permit technology companies to participate in stablecoin issuance. This divergence in viewpoints highlights the complexities of integrating innovation while maintaining robust regulatory safeguards. Some experts suggest that involving tech firms could enhance competition and drive innovation in the stablecoin market.
Currently, South Korean lawmakers are evaluating three distinct bills aimed at regulating stablecoin issuance. Proposed by both the ruling Democratic Party of Korea (DPK) and the opposition People Power Party (PPP), these bills set a minimum capital requirement for stablecoin issuers at 5 billion won ($3.4 million). However, significant disagreements persist, particularly regarding whether stablecoin issuers should be allowed to offer interest on holdings. While some proposals support interest payments, others express concerns about their potential impact on financial stability.
As discussions unfold in the National Assembly, the future of stablecoin regulation in South Korea remains uncertain. Amid this regulatory limbo, major tech companies are advancing their stablecoin initiatives. Notably, Naver, one of South Korea”s leading tech firms, is set to launch a stablecoin wallet in partnership with Hashed and the Busan Digital Exchange, reflecting the growing interest in stablecoins.
Additionally, a potential merger between Naver Financial and Dunamu, the operator of the Upbit exchange, could further propel the development of stablecoin-related services in the region. As the landscape evolves, both regulatory clarity and innovation will be crucial in shaping South Korea”s stablecoin ecosystem.
