South Korea plans new rules to treat stablecoins as payment tools

Bank of Korea targets stablecoins in forex law update

South Korea’s central bank has announced plans to update its foreign exchange laws to specifically regulate stablecoins. Stablecoins are digital assets designed to maintain a steady value, usually tied to a fiat currency like the US dollar. The new rules would officially define these digital assets as payment instruments under national law.

This move comes from the Bank of Korea, which is working with the government to prepare a bill within the current year. The legislation aims to create a clear legal framework for using stablecoins in transactions, particularly those crossing national borders.

Key points from the report

• The Bank of Korea is coordinating with the government to draft a bill amending the Foreign Exchange Transactions Act.
• The proposed amendment will classify stablecoins as payment instruments.
• The central bank intends to build a monitoring framework for virtual assets to prevent illicit activities.
• A broader Digital Asset Basic Act is currently in development to cover licensing for exchanges and stablecoin issuance rules.

Official statements and legislative context

The Bank of Korea stated that it is responding to previous audits by the National Assembly, which urged the central bank to expand payment infrastructure and prevent money laundering risks associated with global crypto exchanges. The central bank noted that cryptocurrency transactions often bypass traditional financial institutions, and tools like mixers increase anonymity, which can make illegal activities easier to hide.

Additionally, Lee Eog-weon, chairman of the Financial Services Commission, confirmed that discussions on the Digital Asset Basic Act are nearing completion. This separate bill aims to establish a comprehensive framework for the crypto industry, including specific licensing regimes for exchanges.

Focus on cross-border security

The regulatory push includes a strong focus on international cooperation to combat illegal digital asset transactions. The central bank explained that it wants to minimize regulatory arbitrage, which occurs when different laws in various places allow people to exploit gaps in the system. By updating the forex law alongside the new digital asset act, South Korea aims to close temporary legislative gaps that could be exploited during the transition period.

Why this matters for the crypto sector

Defining stablecoins as payment instruments in the forex law brings them under specific financial supervision. This clarifies the legal status of digital currencies used for payments and sets boundaries for their use in international trade. For the broader crypto market in South Korea, these moves suggest a shift toward integrating digital assets into the standard financial system rather than leaving them in a regulatory gray area.

What happens next

The government plans to introduce the bill amending the foreign exchange law as soon as possible within this year. The Bank of Korea will continue consulting with relevant ministries to ensure the new rules align with the broader Digital Asset Basic Act, which is also expected to be introduced shortly.

Sources

• The Block