Members of South Korea’s cryptocurrency sector are voicing their concerns over proposed regulations aimed at the stablecoin market, labeling the suggested measures as “unfair.”
According to reports from Hanguk Kyungjae, numerous officials from the South Korean crypto industry, who requested anonymity, have come forward to criticize the draft of the Basic Digital Asset Act, which seeks to impose regulatory changes on the sector.
Skepticism Surrounds Regulatory Proposal
The legislation, introduced by Min Byung-deok, a member of the ruling Democratic Party, is considered a private member’s bill. The Democratic Party holds the majority in South Korea’s National Assembly, although the opposition, the People Power Party, remains in control of the government as the nation approaches the presidential elections in June.
This proposed bill encompasses various stipulations pertaining to the cryptocurrency landscape, with a particular focus on the issuance of domestic stablecoins. Should the legislation pass in its current form, it would mandate that potential stablecoin issuers acquire prior approval from the Financial Services Commission (FSC), the regulatory body overseeing financial affairs.
Industry representatives have expressed apprehension regarding the draft’s “fairness and effectiveness,” raising doubts about its potential impact on local companies.
Min is expected to present the bill to the National Assembly next month.
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Uncertainties in the Stablecoin Sector
The draft legislation reportedly includes provisions that address the issuance and distribution of both stablecoins and cryptocurrencies. Furthermore, it seeks to enforce disclosure requirements for stablecoin issuers, compelling them to prove that they possess cash or similar assets equivalent to the total number of tokens they distribute.
Min’s framework also calls for the establishment of a self-regulatory body to oversee stablecoins and cryptoassets within South Korea. Critics of the bill argue that placing stringent regulations on local businesses while allowing foreign companies to operate without oversight creates an uneven playing field. One anonymous insider pointed out:
“Dollar-pegged stablecoins like Tether (USDT) are not regulated domestically, yet they are traded extensively on local exchanges. This scenario disadvantages South Korean firms. Regulations should aim to foster growth in the industry rather than inhibit it.”
Local Context Lacking in Regulatory Framework
Another industry expert indicated that Min’s proposal seems to draw inspiration from the European Union’s MiCA regulations. However, they argue that this approach overlooks the specific dynamics of the South Korean market, which is predominantly centered around the USDT.
The insider emphasized the necessity for a tailored regulatory framework, stating, “Instead of merely replicating foreign models, we require a systematic approach that accounts for domestic conditions. The institutionalization of stablecoins must be pragmatic and cannot be achieved through a few discussions.”
