South Korea’s Democratic Party on Tuesday proposed a bill to legalize the issuance of stablecoins by local firms, marking the first major crypto policy move under newly elected President Lee Jae-myung.
The move triggered a surge in local crypto-linked stocks. KakaoPay Corp. climbed as much as 18% on Tuesday, its biggest jump in over a year, amid growing investor optimism that the government will back a won-based stablecoin initiative.
The Digital Asset Basic Act, proposed by the ruling party, would allow local companies to issue stablecoins provided they meet a minimum capital requirement of 500 million won ($367,000) and guarantee redemptions through adequate reserves. The proposed legislation is designed to improve transparency and increase competition in the digital asset sector, according to party officials.
The bill also calls for a Presidential Digital Asset Committee to oversee industry policy and introduces entry rules requiring approval, registration, and reporting to the Financial Services Commission.
South Korea’s President Follows Through on Crypto Promises
The proposal comes just a week after Lee, a progressive politician known for his pro-crypto stance, won the presidential election. His administration is moving swiftly to implement campaign pledges aimed at modernizing South Korea’s regulatory framework for digital assets.
Still, the initiative faces pushback from the Bank of Korea, which has expressed concerns about non-bank entities issuing stablecoins. Governor Rhee Chang-yong has argued that such assets could undermine monetary policy, and insists the central bank should lead any effort involving a won-pegged digital currency.
Under the proposed law, all asset-linked tokens, including stablecoins, would require approval from the Financial Services Commission, South Korea’s top financial regulator.
South Korea Joins Race to Regulate Stablecoins
South Korea under its new president has joined the race of other major nations moving fast to regulate fiat-pegged digital assets and the overall crypto industry. Hong Kong has already passed a bill regulating stablecoins that goes into effect on 1 August, with first HKD-pegged stablecoin expected to be issued later this year. The U.S is also moving ahead with its Genius Act, with the Congress set to vote on the bill Wednesday. Stablecoins continue to gain popularity as major banks including JP Morgan and Deutsche Bank explore the digital asset instrument.
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