South Korea Tightens Rules in Stablecoin Sector

The Financial Services Commission (FSC) in South Korea is poised to unveil a new regulatory draft targeting the stablecoin market, with plans to introduce it to the National Assembly in October. This move was confirmed by Park Min-kyu, a member of the ruling party, who received an update during a stablecoin-centric assembly. The draft aims at standardizing issuance procedures, establishing collateral management practices, and setting internal risk control protocols, all under a broader cryptocurrency regulation initiative.

What Does the Draft Include?

According to MoneyToday, the draft aims to delineate the responsibilities of those issuing stablecoins, stipulating how collateral should be maintained and risks managed. Park Min-kyu stated that the FSC plans to present these stipulations within a unified regulatory package to lawmakers in October, marking another regulatory advancement for South Korea’s cryptocurrency market.

The discussions also involved key figures from prominent internet companies like Naver and Kakao, along with leading banks. These discussions highlighted a suggestion to establish a common network between payment providers and banking institutions, which could enhance innovation and compatibility across sectors.

Newly elected President Lee Jae Myung has shown a commitment to elevate the local stablecoin market, using the native currency as its peg, hence reinforcing digital financial sovereignty. Consequently, banks and payment firms have commenced securing trademarks and setting up services tailored to the stablecoin market.

”We believe these regulations will create a more stable and secure environment for digital transactions,” remarked Park Min-kyu during the meeting.

Major banks in the country, including KB Kookmin, Woori, Shinhan, and Han, might engage in talks with Circle’s President Heath Tarbert, the USDC issuer, who will visit South Korea next week.

How Is Japan Approaching Stablecoin Regulations?

In Japan, efforts to launch the first yen-backed stablecoin are advancing rapidly. According to Nikkei, JPYC, a fintech firm, expects to secure regulatory clearance later this fall.

Across the region, regulations are evolving swiftly, as seen with the recent implementation of the Genius Act in the U.S. This act aligns with past American strategies to fortify the dollar’s global standing via stablecoins, providing a nationwide regulatory framework for them.

South Korea’s approach highlights several critical points in stablecoin regulation:

• A focus on detailed guidelines for collateral and risk management.
• Engagement with top domestic companies for feedback and potential collaborations.
• Discussion of international partnerships to enhance market stability.

These regulatory developments underscore a keen interest from South Korea and its neighbors to manage the expanding stablecoin landscape effectively, ensuring financial security and technological progress converge seamlessly.