South Korea’s new President, Lee Jae-myung, has proposed the Digital Asset Basic Act on Tuesday as part of a step toward fulfilling his campaign pledge to allow domestic companies to issue stablecoins in the country.
The bill was introduced by Lee’s ruling Democratic Party to enhance transparency and foster competition in the country’s cryptocurrency sector, as reported by Bloomberg.
South Korean firms can issue stablecoins under the new bill
Also, the bill will permit South Korean firms to issue stablecoins—digital assets pegged to traditional currencies, such as the U.S. dollar—provided they meet strict financial requirements, including maintaining at least 500 million won, approximately $367,876, in equity capital and guaranteeing refunds through reserves.
The move comes as the nation solidifies its position as one of the world’s most active crypto markets, with over 18 million citizens participating in digital-asset trading.
The proposed legislation mandates that all asset-linked digital assets, including stablecoins, must receive approval from South Korea’s Financial Services Commission (FSC) to safeguard investors while encouraging innovation in the sector.
President Lee, a progressive leader who took office after a decisive election victory on June 3, has been a vocal advocate for the adoption of stablecoins.
His administration’s broader crypto agenda also includes allowing Bitcoin exchange-traded funds (ETFs) and encouraging the national pension fund to explore crypto investments.
Meanwhile, Bank of Korea (BOK) Governor Rhee Chang-yong has warned that stablecoins issued by non-bank entities could undermine the effectiveness of monetary policy.
The central bank argues that it, rather than private companies, should take the lead in regulating a won-pegged stablecoin, according to a report by Cointelegraph.
The caution is partly rooted in South Korea’s painful experience with the collapse of TerraUSD (UST) in 2022. Co-created by South Korean entrepreneur Do Kwon, the algorithmic stablecoin’s failure wiped out $40 billion in market value, leaving many investors devastated.
As the country re-engages with stablecoins, the TerraUSD loss remains a reminder of the risks involved.
South Korean digital-asset stocks welcome the development with Shares of KakaoPay Corp., a mobile payment and digital wallet service, surged as much as 18 percent on Tuesday, hitting their highest level since January 2024.
Over the past five days, the stock has jumped 45 percent, reflecting investor optimism about Lee’s crypto-friendly policies.
A global trend with local implications
The region’s push follows global efforts to regulate stablecoins. In the U.S., Congress is set to vote on key stablecoin legislation, while major financial institutions, including Deutsche Bank and Santander, explore their own stablecoin projects.
Circle, the issuer of USDC, saw its shares soar following its recent IPO, underscoring growing institutional interest.
If passed, the Digital Asset Basic Act could position the country as a leader in the crypto space, provided it learns from past mistakes.