New regulations in South Korea may significantly impact the treatment of stablecoins and tokenized real-world assets (RWAs) as the ruling Democratic Party prepares a draft bill. This proposal aims to classify stablecoins as foreign exchange payment instruments, mandating that RWAs be backed by assets held in trust.
The anticipated changes would see stablecoins utilized in cross-border transactions regarded as “means of payment” under the Foreign Exchange Transactions Act, which would subject related businesses to regulatory oversight. Additionally, issuers of RWAs would be required to manage underlying assets within trusts under the Capital Markets Act, enhancing the framework for custody and compliance.
Moreover, the draft would exempt specific stablecoin payments from foreign exchange reporting requirements and prohibit issuers from providing interest on stable digital assets. The Financial Services Commission will also be tasked with developing technical standards to improve interoperability among digital asset networks. Concerns from the Bank of Korea regarding potential complications in capital-flow management and foreign exchange stability have influenced this regulatory approach.