The Democratic Party of Korea (DPK) and the People Power Party (PPP) are reportedly clashing after introducing two bills to regulate stablecoins in South Korea’s National Assembly, with the two bills differing on a key matter.
On Monday, South Korea’s ruling and opposition parties proposed rival bills to establish a regulatory framework for digital assets pegged to the Korean Won (KRW) amid the ongoing efforts to institutionalize the sector in the coming months.
DPK’s member Ahn Do-gil introduced the “Act on the Issuance and Distribution of Value-Stable Digital Assets.” At the same time, PPP’s Kim Eun-hye proposed the “Act on Payment Innovation Using Value-Fixed Digital Assets.”
Additionally, issuers would be required to submit a white paper to the FSC before issuance, detailing the issuance limit, distribution plan, structure of reserve assets, and redemption methods.
However, the Ministry of Economy and Finance and the Bank of Korea (BOK) will be able to request the data from the FSC or conduct joint inspections to maintain foreign exchange market order or implement monetary policy.
Despite the bill’s similarities, the two proposed legislation differ in the issue of interest payments. The PPP lawmaker’s bill would allow interest payments as it could “provide incentives for the use of won-pegged stablecoins abroad.” Meanwhile, Ahn’s bill would completely ban interest payments to prevent market disruption.
According to the report, some industry players are calling for a unique approach to KRW-based stablecoins, as “the prohibition on paying interest for stablecoins is a measure based on U.S. securities law, so other countries outside the U.S. can design their systems following their own national regulations,” a crypto industry representative reportedly affirmed.
Nonetheless, BOK’s Governor Lee Chang-yong recently expressed concerns about the potential issuance of stablecoins pegged to the KRW by non-bank entities, arguing that these digital assets could confuse monetary policies and foreign exchange regulations.
Some bank officials have told Korean media outlets that the financial institutions are preparing for two legalization scenarios, as it remains unclear whether non-bank entities will be allowed to be stablecoin issuers.
“Credit card companies are expected to play a key role in the KRW stablecoin market. Cards are the most familiar means of payment for consumers. When stablecoins are commercialized, customers can use them without any inconvenience if coin payments are made by card,” the report read.
