CMC News

South Korea Moves To Classify Stablecoins as Foreign Exchange Instruments

#SouthKorea's ruling Democratic Party is preparing a draft bill that would place stablecoins under the country's Foreign Exchange Transactions Act and require tokenized #real-world asset issuers to hold underlying assets in managed trusts. The provisions appear in an integrated draft of the Digital Asset Basic Act, as reported Wednesday by the Seoul Economic Daily. Cointelegraph said it could not independently verify the draft through a public National Assembly filing as of Wednesday. #Stablecoins

Under the proposed classification, stablecoin companies involved in cross-border transactions would fall under supervision by domestic foreign exchange authorities. They would not be required to complete a separate registration process. The draft also proposes exempting small-scale stablecoin payments for goods and services from foreign exchange reporting requirements, an approach designed to support everyday use while keeping large-scale cross-border flows under regulatory review.

On the tokenized asset side, issuers of RWA-linked tokens would be required to deposit underlying holdings into managed trusts governed by the Capital Markets Act. A presidential decree would set out further details. The requirement connects tokenized asset issuance to custody frameworks that already apply to conventional financial products in South Korea. #RWA

The draft would ban any form of yield or interest #payments to stablecoin holders, regardless of how the incentive is labeled. That prohibition reflects concerns similar to those being debated in the United States, where policymakers are divided over whether stablecoin yield represents a threat to bank deposits. South Korea's central bank governor Lee Chang-yong warned in January that won-denominated stablecoins could complicate capital flow management and foreign exchange stability.