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- South Korea prepares strict rules as stablecoin regulation bill advances.
- Major banks consider partnership with Circle amid stablecoin growth.
- Central bank urges caution on issuing multiple won stablecoins.
South Korea is taking firm steps to regulate its stablecoin market as lawmakers prepare new legislation. According to MoneyToday, the Financial Services Commission (FSC) will submit its stablecoin bill to the legislative body in October.
The bill will provide transparent guidelines on issuance, collateral management, and risk control systems. It will also be a constituent of the broader digital asset ecosystem being developed in the country.
President Lee Jae Myung has promised to aid a strong won-pegged stablecoin market. He considers digital currencies a necessity for monetary sovereignty in the emerging financial world.
Financial institutions are closely following this direction. Domestic banks and payment companies have registered stablecoin trademarks and are developing services based on the technology.
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Banks and Circle Partnership on the Horizon
During one of the recent stablecoin discussions, legislators were joined by representatives of Naver, Kakao, and large banks. A number of attendees urged greater cooperation between the banking and payment sectors to enhance innovation and interoperability.
At the same time, the country’s four biggest banks are considering collaborating with Circle. Yonhap states that KB Kookmin, Woori, Shinhan, and Hana can soon meet Circle President Heath Tarbert.
Circle, the company that issues USDC, is regarded as a key player in the global stablecoin industry. The possible collaboration may determine South Korea’s entry into the stablecoin market.
Japan, its neighbor, is also planning to move forward. Nikkei reports that the fintech firm JPYC may approve a yen stablecoin this fall.
Nevertheless, the South Korean central bank is wary of a rapid adoption. Governor Lee Chang-yong emphasized that only licensed banking institutions must issue won stablecoins.
He cautioned that the permission of a large number of issuers without rigid control can upset the foreign currency policies and jeopardize the financial stability.
The pressure to regulate stablecoins in South Korea correlates with the increase in the interest of banks and international companies such as Circle. With lawmakers, banks, and technology leaders getting involved, the nation is on the way to developing a secure and regulated stablecoin ecosystem.
Also Read: Hong Kong Financial Regulator Tightens Rules on Crypto Custody Practices
