Proposed South Korean legislation seeks to bring stablecoins and RWAs under financial regulation: Report
A legislative draft from the governing party in South Korea would reportedly prohibit interest payments on stablecoins and establish technical requirements to promote cross-chain interoperability.
A proposed legislative framework from South Korea's governing Democratic Party would reportedly categorize stablecoins as instruments for foreign exchange payments while mandating that tokenized real-world assets (RWAs) maintain backing through trust-held assets.
According to Wednesday's coverage by the Seoul Economic Daily, which referenced a consolidated draft of the anticipated Digital Asset Basic Act, stablecoins utilized for international transactions would receive classification as "means of payment" under provisions of the Foreign Exchange Transactions Act, subjecting associated enterprises to regulatory supervision even in the absence of independent registration processes.
The proposed legislation would additionally mandate that entities issuing tokenized RWAs secure their underlying assets within managed trust arrangements as prescribed by the Capital Markets Act.
Should these provisions become law, stablecoins and tokenized RWAs would fall within the purview of current financial regulatory frameworks, strengthening supervision of international capital movements and establishing custody mandates for supporting assets.
As of Wednesday, Cointelegraph was unable to independently confirm the draft provisions through publicly accessible National Assembly documentation.
Proposed stablecoin regulations focus on international transactions, prohibit interest payments
According to the Seoul Economic Daily's reporting, the proposed framework would provide exemptions for specific stablecoin transactions involving goods and services from foreign exchange disclosure obligations within designated parameters.
The legislative draft would additionally prohibit entities issuing value-stable digital assets from distributing interest payments to token holders, irrespective of the terminology used to describe such compensation. Furthermore, the proposal would mandate that the Financial Services Commission develop technical standards designed to guarantee interoperability among digital asset networks, based on the published report.
The regulatory strategy outlined in the report corresponds with previous apprehensions articulated by South Korea's central banking institution.
During a Jan. 27 statement, Bank of Korea Governor Lee Chang-yong cautioned that stablecoins denominated in Korean won could introduce challenges to capital-flow oversight and foreign exchange market stability, contributing to ongoing discussions regarding appropriate regulatory frameworks for domestically-issued stablecoins.
Proposed legislation would integrate tokenization into established regulatory frameworks
Regarding RWAs, the legislative draft would reportedly obligate issuers to maintain connected assets within managed trust structures as defined by the Capital Markets Act. This provision would connect the issuance of tokenized assets to current custody infrastructure, the report indicates.
The report notes that critical matters including ownership restrictions for exchanges and banking-sector requirements for stablecoin issuers were absent from the current draft.
These exclusions emerge against the backdrop of wider disputes concerning the bill's approach to stablecoin regulation. As of Dec. 31, conflicts regarding stablecoin regulatory oversight and issuer qualifications had caused postponements in the advancement of the Digital Asset Basic Act.