According to local media reports, the South Korean government has begun planning to implement foreign exchange controls on stablecoins. The move comes in response to the increasing use of stablecoins using blockchain technology, especially those pegged to the U.S. dollar, in trading activities. These digital currencies are increasingly used in international trade and fall outside traditional regulatory frameworks. The country’s government’s actions have shown that cryptocurrencies actually have a place in the country.

Stable currency supervision will become the focus of South Korean supervision and crackdown on underground transactions

South Korea aims to mitigate risks that may arise when stablecoins expand their functionality as payment instruments beyond the cryptocurrency ecosystem. In the cryptocurrency ecosystem, stablecoins primarily serve as a medium of exchange.

The country’s regulatory body, the Financial Services Commission (FSC), announced that stablecoin regulation will be the focus of the second phase of the (Virtual Asset User Protection Act). This phase will refer to regulations in other regions, such as the European Union and Japan, which have already implemented stablecoin-related laws.

(South Korea officially implements the (Virtual Asset User Protection Act), VASP has a one-year grace period)

Critics point out that the government has been unable to address the increasing use of stablecoins in trade, leading to regulatory loopholes. There are concerns that unregulated financial flows could pose a potential threat to monetary sovereignty and the broader financial system.

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Learning from the EU and Japan, South Korea will also introduce a stable currency bill?

Contrary to South Korea's incremental approach, both the EU and Japan have been quick to unveil regulatory frameworks. The EU’s MiCA allows financial institutions to issue stablecoins, while Japan recognizes stablecoins as payment modes and requires large transactions to comply with foreign exchange reporting rules.

Reports indicate that the South Korean government is also considering enacting laws to regulate the issuance of stablecoins linked to the Korean won. The government is also expected to relax restrictions on companies holding crypto accounts, a regulation that has been criticized by local industry players.

This article South Korea will implement stable currency foreign exchange controls and introduce a stable currency bill with reference to the EU and Japan’s precedents. First appeared on Chain News ABMedia.