South Korea’s ruling Democratic Party has introduced a new bill that would permit qualified companies to issue stablecoins, marking a significant step toward crypto regulation and adoption. The proposed Digital Asset Basic Act aims to boost transparency and competition in the digital asset market while protecting investors.
Key Provisions of the Proposed Stablecoin Law
Under the draft legislation, companies can issue stablecoins if they meet the following conditions:
- Minimum equity capital of 500 million won ($368,000)
- Ability to guarantee refunds via reserve backing
- Approval from South Korea’s Financial Services Commission (FSC)
The bill emphasizes consumer protection, requiring issuers to maintain full reserve backing to ensure stablecoin holders can redeem their tokens at any time.
President Lee Jae-myung’s Crypto Push
President Lee Jae-myung, who recently took office, has been a vocal supporter of crypto-friendly policies. During his campaign, he pledged to:
- Support a won-pegged stablecoin market to prevent capital outflow.
- Strengthen regulations to safeguard investors.
South Korea has over 15 million crypto investors, making it one of the most active crypto markets globally. The proposed law aligns with the government’s goal of fostering innovation while ensuring financial stability.
Why Stablecoins Matter
Stablecoins, such as Tether (USDT) and USD Coin (USDC), are crypto tokens pegged to fiat currencies like the U.S. dollar. They provide:
- Price stability compared to volatile assets like Bitcoin (BTC) and Ethereum (ETH).
- Efficient on/off-ramps for crypto trading.
- Global liquidity in decentralized finance (DeFi).
The sector has seen record growth, with the total stablecoin market cap surpassing $250 billion recently.
Global Stablecoin Trends & South Korea’s Position
The U.S. has made progress in stablecoin regulation, influencing other markets. Meanwhile, Circle (USDC issuer) saw its stock surge after its IPO, reflecting strong investor confidence.
South Korea’s move could:
- Encourage local fintech innovation.
- Reduce reliance on foreign stablecoins.
- Position the country as a crypto hub in Asia.
Key Takeaways
- South Korea’s ruling party proposes allowing corporate stablecoin issuance.
- Strict requirements: $368K+ capital, full reserves, FSC approval.
- Aims to boost transparency, competition, and investor protection.
- Aligns with President Lee’s pro-crypto agenda.
This legislation could reshape South Korea’s crypto landscape, offering new opportunities for businesses and investors.