What happened?
South Korea’s Democratic Party proposed a bill to legalize the issuance of stablecoins by local firms, marking the first significant crypto policy move under President Lee Jae-myung. The Digital Asset Basic Act requires local companies to meet specific criteria, such as a capital requirement and adequate reserves, to issue stablecoins. This legislative initiative aims to improve transparency and increase competition in South Korea’s digital asset sector.
Who does this affect?
This proposal primarily affects local South Korean companies interested in issuing stablecoins, as they will need to comply with the new requirements. It also impacts investors and stakeholders in the cryptocurrency market, including financial regulators and the Bank of Korea, which has expressed concerns about non-bank entities issuing stablecoins. Additionally, it has a potential impact on South Korean citizens who could benefit from increased stability and transparency in digital transactions.
Why does this matter?
The proposal has created a surge in local crypto-linked stocks, indicating increased investor optimism in the South Korean market. By allowing local firms to issue stablecoins, the bill is expected to foster innovation and competition in South Korea’s digital economy. This move aligns South Korea with global trends where major economies like Hong Kong and the U.S. are also advancing regulations for stablecoins, thus shaping the international crypto landscape.