Korea eyes FX rules for stablecoins used in cross-border trade: report

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As a seasoned analyst with a decade of experience in the financial sector and a keen interest in cryptocurrencies, I find South Korea’s recent regulatory moves intriguing. The government’s decision to impose foreign exchange controls on stablecoins is a prudent step towards maintaining control over its economy, given the growing use of these assets in cross-border trade.

As a crypto investor, I’ve recently learned that the South Korean government is considering implementing foreign exchange controls on stablecoins due to their increasing role in cross-border trading. This move indicates their growing apprehensions about the widespread usage of these digital assets.

It appears that South Korea is considering implementing restrictions on the use of stablecoins for international trades, given growing government concerns about their increased adoption in such activities. As per reports, the Ministry of Economy and Finance is currently assessing ways to bolster the security of crypto transactions, with a focus on those involving stablecoins.

In the current cryptocurrency landscape, it’s been primarily stablecoins at work. The ministry anticipates that they might soon become a means for payment and transactions in the regular economy. However, there are worries that these digital assets operate without much government supervision, potentially threatening the stability of South Korea’s foreign exchange market, according to the report.

The Financial Services Commission plans to focus on regulating stablecoins in their upcoming legislative actions, referencing the regulatory structures already in place in countries like Japan and the European Union. No exact timeframe has been set yet.

The proposed regulatory change is a part of the South Korean government’s initiative to strengthen control over their local cryptocurrency market. According to reports from crypto.news, starting from next year, prominent crypto exchanges like Upbit, Bithumb, and Coinone will need to pay an oversight fee to the Financial Supervisory Service of South Korea. This move signifies South Korea’s stricter approach towards regulating the cryptocurrency industry within their borders.

At first, local industry figures proposed postponing the implementation of oversight charges for cryptocurrency operators. Yet, the timeline for enforcing these charges was moved up because the Financial Supervisory Service (FSS) had planned inspections coming up after the Virtual Asset User Protection Act was enacted.

Under the fresh legislation, crypto trading platforms are obliged to adhere to specific conditions. For instance, they should maintain at least 80% of users’ funds in cold storage for safekeeping. This stored wealth must be segregated from corporate finances and invested in secure, yield-generating assets. Furthermore, these platforms need to periodically reevaluate the assets they trade, scrutinizing their circulation and examining their whitepapers. If any asset fails to meet the established criteria, it will be removed from their listings.

Following the delay in implementing a 20% tax on cryptocurrency gains announced by South Korea’s Ministry of Economy and Finance, it appears that the government is now enforcing related regulations. Reports suggest that the implementation of this tax might be pushed back to 2028 according to the ruling party’s plans.

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2024-10-08 13:58