South Korea’s Ruling Party Wants to Allow Companies to Issue Stablecoins: Bloomberg

South Korea is moving forward with regulating its stablecoin market. President Lee Jae-myung’s Democratic Party introduced a bill, the Digital Asset Basic Act, to the parliament. This legislation aims to foster transparency and competition within the cryptocurrency sector by allowing qualified companies to issue stablecoins.

To qualify, companies must meet specific criteria. They need a minimum of 500 million won (approximately $368,000) in equity capital and must guarantee refunds via reserves. Furthermore, they require approval from the Financial Services Commission. This regulatory framework reflects President Lee’s campaign promises to support South Korea’s crypto industry, particularly in developing a won-based stablecoin market. His goal is to prevent the outflow of national wealth to foreign cryptocurrency markets.

The global stablecoin market has seen significant growth this year, largely fueled by regulatory advancements in the U.S. and increased investor interest. The market capitalization recently surpassed $250 billion for the first time, showcasing the sector’s strength and potential. This growth is further evidenced by the successful IPO of Circle, the issuer of USDC, whose stock price more than quadrupled in its initial three days of trading.

Stablecoins, pegged to traditional assets like fiat currencies (most commonly the U.S. dollar), offer stability in the volatile cryptocurrency market. This stability allows users to hold digital assets without the risk of substantial price fluctuations. The dominance of Tether’s USDT highlights the current market landscape. South Korea’s proactive approach to stablecoin regulation positions it to become a significant player in this rapidly evolving sector, attracting investment and further innovation. The Digital Asset Basic Act represents a significant step towards integrating stablecoins into the South Korean financial system while mitigating risks.