South Korea FSC Supports Proposal for Stablecoin Issuance Dominated by the Bank of Korea (BOK)

According to koreatimes, the Korea Financial Services Commission (FSC) has shifted its stance to support the core proposal of the Bank of Korea (BOK), which stipulates that the issuance rights for Korean won-denominated stablecoins be strictly limited to consortiums in which banks hold the majority stake.

The proposal requires that banks hold more than 50% of shares in the stablecoin issuance consortium to maintain absolute control. However, to accommodate technological innovation, the bill also reserves space for tech companies, allowing them to become the single largest shareholder within the consortium.

Additionally, the proposal sets strict capital requirements for stablecoin issuers, demanding at least 5 billion KRW (approximately $3.7 million) in paid-in capital, with the threshold potentially increasing as the market develops.

However, this consensus-driven proposal among financial regulators has faced resistance during the legislative process. Some members of the National Assembly, including the ruling Democratic Party, have explicitly opposed it.

To break the deadlock, lawmakers are expected to establish a special working group to study and propose alternative regulatory plans. This move aims to balance the differing positions of regulatory agencies and some legislators on control risk issues.

Furthermore, the proposal not only concerns the control rights of stablecoin issuers but also plans to impose stricter regulatory obligations on cryptocurrency exchanges. These include requiring exchanges to improve technical stability standards, mandating compensation for user losses caused by hacking attacks, and facing punitive fines of up to 10% of annual revenue.

In summary, while the FSC in South Korea leans toward a highly cautious issuance system led by traditional banks in the direction of stablecoin regulation, resistance from the legislative body indicates that the final regulatory framework will need to find a difficult balance between financial security, technological innovation, and political consensus.

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