South Korea Plans Regulatory Framework for Won-Backed Stablecoin

According to Cointelegraph, South Korea is reportedly preparing to introduce a regulatory framework for a won-backed stablecoin, with its financial regulator set to unveil a government bill in October. The Financial Services Commission (FSC) will present this bill as part of the second phase of the nation's Virtual Asset User Protection Act. Democratic Party of Korea (DPK) Representative Park Min-kyu disclosed during a policy debate that he received a briefing from the FSC regarding the policy direction on stablecoins. He mentioned that the government bill is anticipated to be submitted to the National Assembly around October. The proposed bill is expected to detail requirements for issuance, collateral management, and internal control systems for stablecoins. The FSC has been developing this framework since 2023 through its virtual asset committee, aiming to establish clearer regulations for crypto service providers in the country. This move comes as South Korea seeks to reduce its reliance on dollar-pegged stablecoins, especially as the United States intensifies its efforts on stablecoin legislation. The institutionalization of won-pegged stablecoins gained momentum following President Lee Jae-myung's campaign pledge. Several lawmakers have since introduced related proposals, including the Digital Asset Basic Act from Representative Min Byung-deok, the Act on the Issuance and Circulation of Value-Stable Digital Assets from Rep. Ahn Do-gul, and the Act on Payment Innovation Using Value-Pegged Digital Assets from Rep. Kim Eun-hye. Local industry stakeholders have emphasized the urgent need for a won-pegged stablecoin to mitigate reliance on dollar-based stablecoin tokens. In June, major South Korean banks collaborated to develop a won-pegged stablecoin to safeguard the currency against the growing dollar dominance. The banks indicated that the upcoming token is expected to materialize in late 2025 or early 2026. Real-world asset (RWA) tokenization tracker RWA.xyz reports that as of August 17, the total market value for stablecoins stands at $266.7 billion, with dollar-pegged stablecoins continuing to dominate 99.8% of the market, amounting to $266.2 billion. In addition to clarifying stablecoin regulations, South Korean authorities have intensified efforts to clamp down on tax evaders using crypto. On Monday, tax officials in Jeju City, the capital of Jeju Province, began freezing and seizing digital assets of users suspected of evading tax obligations through crypto. Authorities are investigating nearly 3,000 individuals in arrears for a total of approximately $14.2 million to determine if they possess holdings that could be seized to settle their tax liabilities.