David Edwards
South Korea’s recently inaugurated president, Lee Jae-myung, is expediting efforts to legitimize stablecoins and expand digital asset infrastructure, fulfilling a core campaign promise. The Digital Asset Basic Act, a legislative framework intended to promote openness and competition in the country’s quickly developing cryptocurrency industry, was presented Tuesday by the ruling Democratic Party.
According to Bloomberg, the proposed measure would permit domestic companies to create stablecoins as long as they maintain a 500 million won (about $368,000) minimum equity capital. Additionally, issuers need to get approval from the Financial Services Commission, South Korea’s primary financial regulator, and make sure redemptions are supported by reserves.
The project coincides with a noticeable increase in stablecoin activity. According to data from the Bank of Korea, transactions involving the top U.S. dollar stablecoins totaled 57 trillion won ($42 billion) on the nation’s five main exchanges in Q1 alone. The bill is expected to increase this volume, further boosting one of Asia’s most vibrant cryptocurrency marketplaces, where it is believed that 18 million people, or more than one-third of the population, trade digital assets.
President Lee, who was sworn in on June 3 after winning a landslide special election, has stated that he has big goals for cryptocurrency. These include the introduction of a won-backed stablecoin, the approval of investment vehicles with a cryptocurrency focus, the creation of Bitcoin ETFs, and the promotion of national pension allocations to cryptocurrency assets.
The Bank of Korea, however, continues to criticize Lee’s strategy. The central bank’s monetary policy power may be undermined by stablecoins that are not issued by banks, Governor Rhee Chang-yong warned. Citing the concerns highlighted by the 2022 collapse of TerraUSD, a failed algorithmic stablecoin created by South Korean entrepreneur Do Kwon, the organization maintains that it should supervise any regulation of local currency stablecoins.
Lee defended his strategy during a May policy roundtable, stating, “We need to establish a won-backed stablecoin market to prevent national wealth from leaking overseas.”
