FSC and Bank of Korea Conflict Over Stablecoin Authority in New Digital Asset Plan

• The government plans a public release of the Basic Digital Asset Act proposal soon.
• FSC coordinates with agencies as the National Assembly awaits the consolidated bill next.
• Stablecoin issuer rules spark debate between the FSC and the Bank of Korea.
• Comprehensive digital asset regulations will accompany Phase Two of the Virtual Asset Act.

The Financial Services Commission will soon announce the government’s proposed Basic Digital Asset Act, also called the Phase Two Virtual Asset Act. The release could come this month or early next month. The ruling party plans to submit a consolidated bill to the National Assembly in January next year. The government proposal aims to provide a clear framework before that step.

Financial authorities confirmed that the National Assembly’s Political Affairs Committee had requested submission by the tenth. The FSC said it could not meet that deadline. Officials explained that internal coordination with relevant agencies required more time. The delay reflects complexity, not disagreement, as multiple bodies must align their positions.

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FSC to Release Digital Asset Bill Highlighting Stablecoins

Instead of proceeding with the submission of the bill, the FSC would make it public at the same time. This is an effective way of ensuring that there is some form of openness with regard to digital assets. A special briefing would also be given alongside the submission of the bill to ensure that information can be shared with the public. Early next month still stands as the latest deadline for the release of the information to the public.

FSC is cooperating with the Bank of Korea in regard to pending matters. One major issue is related to the issuance of stablecoin. Stablecoin is increasingly being used for the purposes of payment and settlement. Regulators are being extra cautious about stablecoin.

FSC and Bank of Korea Debate About Stablecoin Rules

According to the Bank of Korea, it is better for banks to influence the issuance of stablecoins. It calls for at least fifty-one percent of the issuers to be controlled by banks. According to the Bank of Korea, this would ensure that stability is maintained in currencies. FSC rejects this by pointing out that there is little evidence globally of such banks. Europe’s Virtual Assets Act is supportive of digital asset institutions, while Japan’s first yen stablecoin was issued by a fintech company.

This disagreement is also applicable with regard to oversight. While the Bank of Korea requires unanimous consent and the right of agency inspection, the FSC considers such an extent of control to be unnecessary. A possible middle ground could be made dependent on flexible ownership levels for issuers of various types of instruments. Aside from stablecoin issuers, other areas encompassed by the scheme of the government include licensing, conduct of business, capital, listings, disclosure, oversight, and sanctions.

This announcement is helping to shape the digital assets regulatory framework for Korea in anticipation of the consolidated bill in January. Industry observers are closely monitoring this development as the FSC seeks to strike a proper balance between innovation and stability.

Also Read: South Korea’s FSC Cracks Down on Crypto Lending, Orders Exchanges to Suspend Services