South Korea to Regulate Stablecoins With Foreign Exchange Rules

South Korea’s Ministry of Strategy and Finance plans to apply foreign exchange regulations to dollar-pegged stablecoins. A local report recently revealed that this regulatory move will likely be accompanied by the creation of a stablecoin pegged to the South Korean won.

South Korea to Regulate Stablecoins

The Asian country’s government ministry recognized that stablecoins play a vital role in the financial system, enabling cross-border payments within the virtual asset ecosystem and real-world economy.

The South Korean Financial Services Commission (FSC) is in talks about incorporating stablecoins into the second legislative stage of the country’s Virtual Asset User Protection Act. While at it, the regulatory agency intends to consult other government authorities with established regulatory frameworks involving stablecoins like Japan and the European Union (EU).

The Asian country began leaning toward cryptocurrencies after the Democratic Party won most of the 300-seat parliament during the National Assembly election in April. In August, the party members revealed plans to urge the FSC to approve spot Bitcoin exchange-traded funds (ETFs) in the country. If the ETF is approved, local investors can acquire the leading crypto asset within the traditional financial system.

Meanwhile, the country’s National Pension Service (NPS) has injected nearly $34 million into MicroStrategy’s shares. This move is regarded as a pro-crypto investment since MicroStrategy is one of the largest corporate BTC holders globally, and its frequent bitcoin acquisitions benefit its stock price.

Other Governments Embrace Stablecoins

As stated earlier, Japan and the EU have welcomed stablecoins into their financial systems. Last month, Japan’s three largest banks joined forces to establish a stablecoin platform for international payments. The trio aims to commercialize the project next year.

The EU, on its part, has shown support for stablecoins via its Markets in Crypto Assets (MiCA) regulatory framework. The guideline mandates stablecoin issuers to secure regulatory licenses before operating in the bloc. Last week, the popular crypto exchange Coinbase revealed plans to delist non-compliant stablecoins by the end of the year. This decision could affect Tether’s USDT since the token has yet to secure financial approval to operate in the region.