The Democratic Party of Korea (DPK) and the People Power Party (PPP) are reportedly clashing after introducing two bills to regulate stablecoins in South Korea’s National Assembly, with the two bills differing on a key matter.
South Korean National Assembly Divided
On Monday, South Korea’s ruling and opposition parties proposed rival bills to establish a regulatory framework for digital assets pegged to the Korean Won (KRW) amid the ongoing efforts to institutionalize the sector in the coming months.
DPK’s member Ahn Do-gil introduced the “Act on the Issuance and Distribution of Value-Stable Digital Assets.” At the same time, PPP’s Kim Eun-hye proposed the “Act on Payment Innovation Using Value-Fixed Digital Assets.”
According to local reports, both bills share several similarities, including the assignment of stablecoin oversight to the Financial Services Commission (FSC). Under the two legislations, the financial regulator would be able to implement measures regarding the issuance, distribution, and redemption of stablecoins and impose emergency rules if it has concerns about market disruption or harm to users.
Additionally, issuers would be required to submit a white paper to the FSC before issuance, detailing the issuance limit, distribution plan, structure of reserve assets, and redemption methods.
However, the Ministry of Economy and Finance and the Bank of Korea (BOK) will be able to request the data from the FSC or conduct joint inspections to maintain foreign exchange market order or implement monetary policy.
DPK’s Representative also proposed the establishment of a “Value Stability Digital Asset Committee” with the Ministry of Economy and Finance, the Bank of Korea, and the FSC to discuss related policies.
Despite the bill’s similarities, the two proposed legislation differ in the issue of interest payments. The PPP lawmaker’s bill would allow interest payments as it could “provide incentives for the use of won-pegged stablecoins abroad.” Meanwhile, Ahn’s bill would completely ban interest payments to prevent market disruption.
According to the report, some industry players are calling for a unique approach to KRW-based stablecoins, as “the prohibition on paying interest for stablecoins is a measure based on U.S. securities law, so other countries outside the U.S. can design their systems following their own national regulations,” a crypto industry representative reportedly affirmed.
Financial Industry Waiting For Stablecoins Legislation
Amid the growing momentum of stablecoins in the country, Min Byeong-deok, a member of the DPK, proposed a comprehensive legislation to establish a more structured regulatory framework for crypto assets in the country.
Nonetheless, BOK’s Governor Lee Chang-yong recently expressed concerns about the potential issuance of stablecoins pegged to the KRW by non-bank entities, arguing that these digital assets could confuse monetary policies and foreign exchange regulations.
Some bank officials have told Korean media outlets that the financial institutions are preparing for two legalization scenarios, as it remains unclear whether non-bank entities will be allowed to be stablecoin issuers.
As reported by Bitcoinist, the sector is considering a business model in which banks establish a joint venture to collectively issue stablecoins, while also contacting various non-bank companies to prepare for the legalization and issuance of KRW-pegged digital assets.
On Tuesday, the Maeil Business Newspaper affirmed that the credit card industry is preparing to apply for trademark rights. According to the news outlet, the Credit Finance Association and eight full-time credit card companies, including Shinhan, Hyundai, Samsung, KB Kookmin, Lotte, Woori, Hana, and BC Card, are preparing to file for trademark rights for the KRW stablecoin under the “CARD KRW” tentative name.
“Credit card companies are expected to play a key role in the KRW stablecoin market. Cards are the most familiar means of payment for consumers. When stablecoins are commercialized, customers can use them without any inconvenience if coin payments are made by card,” the report read.
