South Korea’s Crypto Regulation Delayed as Stablecoin Rules Face Deadlock

South Korea’s adjacent large measurement toward broad crypto regularisation has been pushed into 2026, arsenic regulators stay divided implicit however tightly stablecoin issuance should beryllium controlled.

Key Takeaways:

• South Korea’s broad crypto instrumentality has been delayed to 2026 owed to a quality implicit who should beryllium allowed to contented stablecoins.

• Regulators are proposing strict stablecoin rules, including 100% reserves held successful banks.

• The draught instrumentality would rise compliance standards crossed crypto.

While authorities broadly hold connected imposing strict capitalist extortion standards, a prolonged quality implicit who should beryllium allowed to contented stablecoins has stalled legislative progress.

According to a study from Yonhap News Agency, the Financial Services Commission (FSC) is drafting a wide-ranging Digital Asset Basic Act that would present robust safeguards for stablecoin users.

Under the proposal, issuers would beryllium required to clasp reserve assets wholly successful slope deposits oregon authorities bonds and entrust 100% of those reserves to licensed custodians specified arsenic banks.

The goal, regulators say, is to insulate investors from losses if a stablecoin issuer collapses.

By segregating reserves and placing them nether third-party custody, authorities purpose to forestall the spillover risks that person plagued poorly backed integer assets successful past marketplace failures.

Beyond stablecoins, the measure would importantly rise compliance standards crossed the crypto sector. Digital plus work providers would beryllium taxable to disclosure rules, advertizing restrictions, and lawsuit extortion requirements akin to those successful accepted finance.

In cases of hacks oregon strategy outages, firms could beryllium held liable for damages adjacent successful the lack of negligence, mirroring liability standards applied to online retail platforms.

The draught instrumentality could besides reopen the doorway to home token fundraising. Initial coin offerings (ICOs), banned successful South Korea since 2017, whitethorn beryllium permitted for section projects that conscionable strict disclosure and hazard absorption criteria, marking a notable displacement successful policy.

Despite statement connected capitalist protections, stablecoin regularisation remains the cardinal constituent of contention.

The Bank of Korea has pushed for a exemplary successful which stablecoins are issued lone by consortia controlled by banks, insisting that lenders clasp astatine slightest a 51% ownership stake.

The cardinal slope argues this attack is indispensable to support monetary stableness and forestall systemic risks.

The FSC, however, has resisted mounting a fixed ownership threshold. Officials person warned that limiting issuance to bank-led structures could sideline exertion firms and dilatory innovation successful payments and integer finance.