S.Korea’s ruling party gears up for won-based stablecoin legislation

South Korea’s push to launch won-based stablecoins is taking shape as the ruling Democratic Party unveiled proposed legislation to promote cryptocurrencies pegged to the local currency.

The move follows the US Congress’ recent approval of dollar-pegged stablecoins, sparking concerns that the Korean won could be marginalized in global digital finance.

Democratic Party lawmaker Min Byung-deok, a member of the National Assembly’s Political Affairs Committee, has proposed three bills that would allow non-financial companies to issue won-denominated stablecoins beyond the Bank of Korea, while placing digital assets under a legal framework. 

They also include provisions to facilitate security token offerings (STOs) and to allow spot market exchange-traded funds (ETFs) backed by virtual assets.

“The STO bill will first go through the standing committee next month,” Min said at a seminar on Tuesday hosted by the party’s internal economic policy study group.

“The presidential office’s chief policy aide Kim Yong-beom, a blockchain expert, is largely supportive of the bills,” he added.

Kim, a former vice finance minister, had until recently led Hashed Open Research, a think tank run by the country’s largest cryptocurrency and blockchain investment firm Hashed.

Legislation for won-currency stablecoins is one of President Lee Jae-myung’s campaign pledges. His appointment reflects the president's commitment to advancing digital asset policy. 

Speaking at the seminar, Min warned, “When the tsunami of dollar stablecoins arrives, the Korean won may hardly be used at all.”

LEVERAGING K-CONTENT, TECH DEVICES

He suggests leveraging Korea’s globally influential assets such as Samsung Electronics Co.'s Galaxy smartphones and K-pop icon BTS, as well as K-content, by promoting transactions linked to them through won-based stablecoins.

Last week, the US Congress passed the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act), bringing cryptocurrencies into the mainstream. The law is expected to boost demand for US Treasuries and cement the dollar’s influence in digital payments.

Stablecoins are pegged one-to-one to a reference asset like the US dollar, fiat money, gold, or government bonds.

STRICT OVERSIGHT

Another former vice minister, Ahn Do-geol, now a Democratic Party lawmaker, is set to submit bills next week that would define standards and qualifications for the issuance of won-currency stablecoins.

One proposal would make it mandatory for issuers to hold collateral equivalent to the full value of the issued cryptocurrencies.

The bills also propose revisions to foreign currency transaction laws and strengthen oversight in the crypto market by the Bank of Korea and the Ministry of Economy and Finance.

Ahn said the bills were coordinated by the finance ministry, BOK and Financial Services Commission following the launch of their task force on stablecoin implementation after President Lee was sworn in last month.

“The Bank of Korea must be empowered to play its role in maintaining financial stability," he said at the seminar.

"If stablecoins are used abroad, they become a form of foreign exchange. That means the finance ministry needs a legal foundation to exercise its authority,” he noted.

Ahn’s proposal focuses on institutionalizing Korean won-based stablecoins, while Min’s serves as a broader framework bill covering digital assets, including stablecoins.

They expect the bills to pass through the National Assembly within the year.

Write to See-Eun Lee at see@hankyung.com
 

Yeonhee Kim edited this article.