The Bank of Korea: "Stablecoins Will Be Subject to the Same Domestic Regulations Upon Adoption of International Standards"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jang Sehee] International standards for the supervision of stablecoins, which have a high potential to be used as a means of payment, are scheduled to be established by December this year. The Bank of Korea has stated that once the international standards are adopted, the same standards will be applied domestically.

On the 14th, the Bank of Korea announced that CPMI and IOSCO plan to finalize their opinions on the "Report on the Application of Principles for Financial Market Infrastructures to Stablecoin Systems" by December 1. The report will then be published, followed by further research, leading to the finalization of the guidelines. Unlike cryptocurrencies such as Bitcoin, which have high price volatility, stablecoins are designed to maintain a stable value by being linked to assets or currencies.

CPMI and IOSCO determined that it is necessary to apply the principles for financial market infrastructures to stablecoins. They view the transfer of funds via payment systems and the transfer of funds using stablecoins as essentially equivalent.

They identified distinctive characteristics of stablecoin systems, including ▲ the potential use of payment assets that could introduce additional financial risks ▲ interdependencies among various stablecoin system functions ▲ decentralization in operation and governance ▲ the possibility of large-scale application of technologies such as distributed ledger technology.

Key considerations related to the application guidelines for stablecoin systems include the assertion that stablecoin systems should be owned and operated by a single or multiple identifiable and accountable legal entities managed by natural persons. They also advised the development of robust risk management frameworks and measures.

Additionally, it was stated that the point at which fund transfers become irrevocable and the point at which technical settlement occurs must be clearly defined. Risk management techniques to reduce credit risk and liquidity risk should also exist if necessary.

Meanwhile, these guidelines are highly likely to be adopted as international standards, and once confirmed, they will be applied domestically as international standards, serving as evaluation criteria for stablecoin systems.

This content was produced with the assistance of AI translation services.