Stablecoin Legislation Risks Missing the "Golden Time"

"Actual Implementation Expected No Sooner Than Late Next Year"
US and Hong Kong to Launch Systems Early Next Year

While countries such as the United States and Japan are rapidly incorporating stablecoins into their regulatory frameworks, South Korea remains at the stage of proposing bills. Although there is little disagreement between the ruling and opposition parties, raising the possibility of legislation within the year, industry insiders point out that "the opportunity has already been missed."

Currently, a total of three stablecoin bills are pending in the National Assembly. On July 28, Ando Geol, a lawmaker from the Democratic Party, and Kim Eunhye, a lawmaker from the People Power Party, each proposed related bills, and on July 30, Min Byungdeok (age 55, Judicial Research and Training Institute class 34), also from the Democratic Party, submitted a bill as well.

The bills proposed by Assemblyman An and Assemblywoman Kim do not differ significantly. Both bills require that issuance be managed under a licensing system by financial authorities, and mandate that issuers maintain a minimum capital of 5 billion won. They also include user protection measures, such as requiring issuers to deposit at least 100% of the value in deposits or short-term bonds.

However, the two bills differ regarding interest payments. Assemblyman An's bill completely prohibits interest payments on stablecoins. This aims to prevent stablecoins from excessively replacing currency at an early stage and to block their transformation into investment products. In contrast, Assemblywoman Kim's bill argues that allowing interest payments is necessary to ensure incentives for issuers.

A ruling party official stated, "This is a presidential pledge, and since there is little disagreement between the parties, the government bill could be prepared as early as October," adding, "There is a high possibility that it will be processed by the National Assembly within the year."

Despite the possibility of passage within the year, the industry atmosphere is that "Korea has missed the timing again." In the United States, on July 18, President Donald Trump signed the "Genius Act," which establishes a regulatory framework for the issuance and operation of payment stablecoins, thereby formalizing their institutionalization.

Japan revised its Payment Services Act last year to define stablecoins as electronic payment instruments. This year, regulations were eased to allow management of stablecoins with some low-risk government bonds and short-term deposits. Singapore has been implementing issuance and distribution guidelines since 2024, and Hong Kong passed a bill in May establishing a licensing system for stablecoin issuers.

An official from the digital asset industry said, "While the market is being reorganized around the United States, with active institutionalization such as Circle's IPO and Japan's JPYC license approval, Korea is falling behind due to criticism without alternatives, effectively conceding the market." Another digital asset industry official commented, "Since enforcement ordinances must also be prepared, even if the bill passes the National Assembly this year, actual implementation will not occur until the second half of next year at the earliest. In contrast, Hong Kong and the United States may implement their systems in the second half of this year or the first half of next year. If dollar stablecoins are freely used in international trade during this period, it will be difficult for late-introduced won-based stablecoins to gain traction in the market."

A financial industry official also stated, "Dollar stablecoins have already secured significant influence within the global financial order. If South Korea does not expedite the introduction of won-based stablecoins, it may face challenges in defending its monetary policy."

Perspectives on won-based stablecoins are somewhat divided. Another financial sector official predicted, "Although there is skepticism about the limited international utility of won-based stablecoins in trade settlements, if the system is designed to actively facilitate overseas transactions between Korean companies, it could be effective." On the other hand, Kim Junghwan (age 37, 10th Bar Exam), an attorney at Architect Law Office specializing in digital assets, said, "USDT is widely used because it is pegged to the dollar, the key currency, and is relatively less regulated compared to the dollar. Won-based stablecoins have low utility and, since they are government-led, are expected to face strong regulations, making it difficult for them to establish themselves in the market."

Kim Jihyun, Legal Times Reporter

※This article is based on content supplied by Law Times.

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