**South Korea Tightens Crypto Regulations, Eyes Stablecoin Rules**

South Korea's government is gearing up to apply foreign exchange rules to cross-border transactions involving dollar-pegged stablecoins. The Ministry of Economy and Finance announced on Oct. 8 that it is reviewing measures to ensure the soundness of stablecoin transactions. Recognizing that stablecoins are used globally, the government is considering new rules for these digital assets.

The Financial Services Commission (FSS) will prioritize stablecoins in the next legislative phase of the Virtual Asset User Protection Act. The FSS plans to consult with regulators in Japan and the European Union, although no specific timeline has been provided.

The new regulations will start with a system for issuing won-pegged tokens, followed by rules for foreign currency stablecoins. This move follows Japan's and the EU's recent regulatory actions on stablecoins.

In addition, South Korea has enforced stricter laws to protect crypto users. The Virtual Asset Protection Act, effective since July 19, mandates virtual asset service providers (VASPs) to maintain insurance against hacks, keep user assets separate from exchange tokens, and regularly review token listings. Violators face severe penalties, including jail time and hefty fines.