Market News

New South Korea Crypto Law Faces Delay Amid Stablecoin Issuance Debate

South Korea’s Digital Asset Basic Act (DABA), aimed at regulating the burgeoning crypto market, has hit a roadblock over stablecoin issuance regulations.

The primary contention arises between the Bank of Korea (BOK) and the Financial Services Commission (FSC) regarding who can issue KRW-pegged stablecoins.

The BOK insists that only banks with at least 51% ownership should have this authority, citing stability needs.

Conversely, the FSC fears that such a restriction could hinder competition and stifle innovation, advocating for more inclusive regulations.

This disagreement reflects ongoing global discussions about the control of fiat-backed stablecoins and how such decisions can affect innovation and financial oversight.

Additionally, the proposal to allow foreign-issued stablecoins, contingent upon local licensing, adds another layer of complexity to the regulatory landscape.

Experts and lawmakers are voicing concerns over the BOK's strict proposal, suggesting regulatory measures could mitigate stability risks without limiting the market.

The stalemate could delay the enactment of DABA until January 2024, with full implementation now unlikely before 2026.

This legislation marks a pivotal shift for South Korea, which has only recently softened its historically stringent stance on cryptocurrency.

As discussions continue, stakeholders are closely monitoring the potential impacts on their operations and the wider digital asset marketplace in South Korea.