South Korea’s government plans to enforce foreign exchange regulations on cross-border stablecoin transactions to address their increasing use in international trade, as reported by local media on Oct. 8.
Regulating stablecoins
The Ministry of Economy and Finance aims to stabilize the rising number of cross-border crypto transactions involving stablecoins. Authorities seek to manage risks arising from the expanding role of stablecoins as a payment tool beyond the virtual asset ecosystem.
The Financial Services Commission (FSC) highlighted stablecoin regulation as a focus in the second phase of the Virtual Asset User Protection Act. This phase will consider regulations from regions like the EU and Japan, which have already implemented stablecoin laws.
Other approaches
In contrast to South Korea’s gradual approach, the EU and Japan have swiftly implemented regulatory frameworks. The EU’s Markets in Crypto-Assets (MiCA) regulation allows financial institutions to issue stablecoins, while Japan treats stablecoins as a recognized form of payment, subjecting large transactions to foreign exchange reporting rules.
South Korea is considering developing a legal framework for issuing stablecoins tied to the Korean won. This move would establish the groundwork for regulating stablecoins linked to both domestic and foreign currencies.
The government also plans to ease restrictions on companies holding crypto accounts. By allowing corporations to engage in stablecoin-based trade, the government aims to capture these transactions in official statistics for a clearer economic overview.
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