South Korea Moves to Regulate Stablecoins as Payment Instruments
South Korea's financial authorities are preparing a significant update to the country's regulatory framework. The government, in collaboration with the Bank of Korea, is drafting revisions to the Foreign Exchange Transactions Act, with the aim of formally classifying stablecoins as regulated payment tools. This legal overhaul is targeted for completion within the current year.
Establishing a Comprehensive Monitoring Framework
The proposed amendments go beyond mere definition. They include plans to establish a dedicated monitoring system for virtual assets. The central bank is coordinating with government agencies to develop measures specifically targeting cross-border digital asset transactions. This legislative push addresses concerns raised during last year's National Assembly audit.
Lawmakers had called for two major improvements: modernizing domestic payment infrastructure to meet global standards—such as extending the operating hours for large-value payment systems—and strengthening defenses against money laundering risks posed by international crypto exchanges entering the local market. The new legal framework is designed to tackle these issues head-on.
Aligning Domestic Law with International Efforts
While tightening domestic rules, the Bank of Korea also emphasized its commitment to building international cooperation frameworks to combat illicit digital asset transactions. The bank pointed out that certain technologies heighten anonymity, posing significant challenges for regulators worldwide.
In parallel, work on the broader Digital Asset Basic Act is nearing its conclusion. This foundational legislation will set out licensing requirements for cryptocurrency exchanges and rules for stablecoin issuance. Financial Services Commission Chairman Lee Eog-weon stated during a recent hearing that discussions on the bill are almost finalized, and the government intends to enact it promptly.
To minimize regulatory gaps during the legislative transition, the central bank pledged to continue close consultations with relevant agencies. This coordinated approach reflects South Korea's attempt to balance the promotion of financial innovation with the imperative of maintaining systemic stability.