Stablecoin legislation also accelerates…disagreements over issuing entities discussed

The party and the government are speeding up legislation for stablecoins, virtual assets pegged to the won. They will also begin full discussions on second-stage virtual asset legislation that includes this measure.

On the 27th, according to political circles, the Democratic Party of Korea and the Financial Services Commission will hold a party-government meeting at the National Assembly on the 1st of next month. It will be the first such meeting in about two months since the decision on September 25 to withdraw the overhaul of the financial supervisory system. Han Jeong-ae, chair of the Democratic Party's Policy Committee, and Lee Eok-yeon, chairman of the Financial Services Commission, are expected to attend.

At the meeting, the party and the government are expected to exchange views on detailed matters for additional virtual asset legislation. Currently, the only virtual asset-related law in place is the Virtual Asset User Protection Act, enacted in June 2023. Second-stage legislation (sectoral laws) to cover virtual asset issuance, distribution, and operators remains.

Financial authorities have been preparing the second-stage bill. The bill is expected to be submitted through Kang Jun-hyun, a Democratic Party lawmaker who serves as a committee secretary in the National Assembly. The government reportedly drafted the contents to be included in the bill in report form and sent it to Representative Kang early last month. Since then, the party and the government have been refining the bill at the working level.

Currently, bills such as the Digital Asset Basic Act (by Democratic Party lawmaker Min Byung-deok), the Digital Asset Innovation Act (by Democratic Party lawmaker Lee Kang-il), and the Digital Asset Consolidation Act (by People Power Party lawmaker Kim Jae-seop) have been proposed in the National Assembly. The Democratic Party also formed a Digital Asset Task Force (TF) to expedite legislation. The ruling party is reportedly expected to urge the financial authorities at this party-government meeting to complete and submit the government's draft as soon as possible.

Just as the first-stage virtual asset legislation focused only on user protection, there is speculation that this time lawmakers will handle the urgent issue of stablecoin-related laws first. Authorities are expected to report to the National Assembly the coordination with related institutions such as the Bank of Korea and the Ministry of Economy and Finance on requirements for stablecoin issuers.

Stablecoins are virtual assets that have a 1-to-1 exchange value with currencies such as the dollar, the euro, or the won. Dollar-based stablecoins are increasingly used, including for trade settlements. As concerns grow that gaps in foreign exchange control could emerge and monetary sovereignty could be threatened, calls for establishing a domestic issuance base are increasing.

Reporter Kang Hyun-woo hkang@hankyung.com