South Korean policy paper advocates for stablecoin regulations ahead of comprehensive digital asset legislation
New policy document advocates for temporary licensing frameworks, increased operational flexibility for those issuing stablecoins, and preliminary regulatory measures in advance of the Digital Asset Basic Act.
According to a policy document released Wednesday by Hashed Open Research in collaboration with the Solana Policy Institute, South Korea ought to grant stablecoin issuers enhanced operational flexibility, deliver temporary licensing frameworks, and implement stablecoin regulations in stages prior to finalizing its Digital Asset Basic Act.
The document provides a comprehensive overview of a symposium that took place on June 23, bringing together industry representatives, legal specialists and legislative officials.
South Korea's Digital Asset Basic Act represents the nation's initial attempt at creating an all-encompassing regulatory framework for digital assets, encompassing stablecoins, token issuance, disclosure requirements and marketplace regulations. Nevertheless, legislative progress has stalled as lawmakers struggle to merge several competing bills, with disputes centered on stablecoin issuance requirements causing significant delays.
According to Democratic Party lawmaker Ahn Dogeol, legislative officials were exploring a potential middle-ground solution whereby banking institutions would maintain controlling ownership stakes while fintech companies and non-banking entities would handle day-to-day operations.
Legal partner Kim Hyobong from Bae, Kim & Lee stated that South Korea needs to provide clarity regarding which cryptocurrency-related activities financial institutions are permitted to engage in, address the current uncertainty surrounding licensing requirements for stablecoin payment services, and establish regulatory guidelines for stablecoins issued by foreign entities.
Additionally, Kim recommended that South Korea adopt an approach similar to the European Union's gradual implementation of the Markets in Crypto-Assets Regulation by putting stablecoin issuance regulations into effect before finalizing the Digital Asset Basic Act.