South Korea is reportedly considering implementing foreign exchange controls on stablecoins amid rising concerns about their increasing use in cross-border transactions.
According to The Korea Economic Daily, the country’s Ministry of Economy and Finance is evaluating strategies to strengthen the stability of cryptocurrency transactions, particularly those related to stablecoins.
While no specific timeline has been provided, the Financial Services Commission is anticipated to prioritise stablecoin regulation in its upcoming legislative agenda, taking cues from the regulatory frameworks implemented in Japan and the European Union.
The report highlighted that the government’s push to implement foreign exchange regulations on stablecoin transactions stems from the growing recognition of cryptocurrencies as a medium of trade. This shift suggests that changes to the government’s current stance—which views virtual assets as lacking real value—are likely necessary.
According to the report, a legal framework for South Korean Won-pegged stablecoins will be developed first before regulations are extended to foreign currency coins. A government official was quoted as stating, “Stablecoin regulations will start with the establishment of a system for issuing won-pegged coins.”
This potential regulatory change aligns with the South Korean government’s broader initiative to enhance oversight of the local crypto market. Thanks to new regulatory rules, local crypto exchanges will be required to pay an oversight fee to the Financial Supervisory Commission starting next year. An FSC official stated that the fees are similar to quasi-taxes for financial institutions, designed to cover regulatory oversight costs. With the enforcement of the Virtual Asset User Protection Act, inspections by the regulator will begin immediately, funded by these fees.
Meanwhile, the FSC approved new regulations to enhance investor protection amid concerns over cryptocurrency exchange bankruptcies. These rules require Virtual Asset Service Providers (VASPs) to separate customer deposits from operational funds and store them in reputable financial institutions, aiming to bolster trust in the digital asset market.
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