South Korea postpones stablecoin law due to disputes

Key points:

• The adoption of a bill regulating stablecoins in South Korea has been suspended due to disagreements among regulators.
• The Bank of Korea fears the emergence of a large number of “private currencies.”
• The bills require potential issuers to have at least 500 million Korean won in equity capital.

South Korean newspaper Busan Ilbo reported that four bills on stablecoins submitted to the National Assembly in recent months are still under review by the committee. The delay in passing the bills is due to regulators and lawmakers being unable to agree on key provisions. The newspaper wrote:

“Discussions on institutionalizing stablecoins in South Korea are stuck at a standstill. This stems from persistent disagreements between the National Assembly, the government, and the Bank of Korea (BOK).”

The publication noted that the parties cannot agree on whether fintech and IT companies should be allowed to issue coins. The BOK and the government are in favor of limiting issuance to domestic commercial banks only.

In recent years, internet giants such as Naver and Kakao have also entered the stablecoin market. The Bank of Korea and other regulators fear that allowing companies to issue coins pegged to the Korean won will lead to the growth of “private currencies” controlled by large technology companies.

Requirements of the bills

All four bills impose different requirements on stablecoin issuers. The most progressive one proposes to ensure that issuers have at least 500 million won ($360 026) in equity capital. This bill would open the door to startups wishing to launch stablecoins pegged to the Korean won.

However, the most conservative of the bills states that only companies with at least 5 billion won ($3,6 million) in equity capital will be able to enter the market.

The Busan Ilbo newspaper reported that the review process is divided between two committees of the National Assembly: the Political Affairs Committee and the Strategy and Finance Committee.