South Korea Urged To Expedite Stablecoin Regulations Amid Dollar Concerns

According to Odaily, the Chairman of South Korea's Financial Services Commission (FSC), Kim Byung-hwan, emphasized the urgent need for the country to regulate stablecoins while expressing concerns over the strong U.S. dollar. Kim stated that while swift action on stablecoin regulation is necessary, the current strength of the dollar is influenced by potential macroeconomic factors, including the robust performance of the U.S. economy. These remarks suggest that the FSC is still expected to introduce stablecoin regulations later this year. Lawmakers and financial regulators are currently working on the "second phase" of the Virtual Asset User Protection Act, a cryptocurrency-related legislation that took effect in mid-2024. Cryptocurrency advocates are hopeful that the new bill will include provisions for stablecoin regulation. Major South Korean companies are eager to launch dollar-pegged stablecoins in the near future, fearing they might fall behind technological competitors in the U.S. and other regions. However, regulatory bodies have delayed action on this issue, possibly due to ongoing political uncertainties surrounding the presidential office. Yoon Han-hong, a member of the People Power Party and Chairman of the National Assembly's Political Affairs Committee, highlighted the challenges faced by South Korean companies in issuing stablecoins. He noted that these companies need to purchase U.S. Treasury bonds, which requires providing dollars to the federal government. This process results in dollars flowing back to the U.S. government and essentially disappearing, a concern that Yoon believes is underestimated by financial regulators.