Democratic Party moves to exclude 'bank-majority model' from issuers of Korean won stablecoins

Suehyeon Lee

Summary

The Democratic Party of Korea is reportedly organizing discussions in a direction that does not adopt a proposal to limit issuers of Korean won stablecoins to a 'bank-majority model'.
There is an atmosphere emphasizing private-sector-led market activation and innovation, and it stated that additional coordination is needed regarding how the Bank of Korea exercises influence in the stablecoin issuance and approval process.
Although coordination of issues between the Financial Services Commission and the Bank of Korea has been delayed, the Democratic Party suggested it may shift to lawmaker-initiated legislation if necessary and plans to soon finalize the legislative direction of the Digital Asset Basic Act.

*The Democratic Party's Digital Assets Task Force (TF) that held a meeting with the virtual asset industry last October. Photo = Office of Democratic Party of Korea lawmaker Lee Jeong-mun*

The ruling Democratic Party of Korea is reportedly organizing discussions in a direction that effectively does not adopt the 'bank-centered consortium' model requested by the Bank of Korea in the second-phase digital asset legislation (Digital Asset Basic Act), which includes the introduction of Korean won stablecoins.

According to the Democratic Party's Digital Assets Task Force (TF) on the 15th, there is a negative consensus within the TF toward the Bank of Korea's argument that stablecoin issuers should be limited to corporations in which banks hold a majority stake (51% or more). This is interpreted as reflecting a judgment that innovation and private-sector-led market activation should be given priority.

Regarding another issue — the composition method of the policy consultative body responsible for stablecoin approval and regulation — the atmosphere is that the 'unanimous decision-making structure' advocated by the Bank of Korea is unlikely to be reflected in legislation. The Bank of Korea has maintained the position that if bank consortium regulation is not codified in law, a policy consultative body involving the Ministry of Economy and Finance, the Financial Services Commission, and the Bank of Korea should be formed and that the body should decide approvals and regulatory matters by unanimous vote.

A TF official said, "The issue of the policy consultative body also has an aspect of institutionally securing the Bank of Korea's influence in the issuance approval process," adding, "While a structure that reflects the Bank of Korea's opinion itself is necessary, additional coordination is needed regarding the method."

Meanwhile, the Democratic Party had earlier requested that the government submit the second-phase digital asset bill by the 10th of this month, but the government draft has not yet been submitted as coordination over issues between the Financial Services Commission and the Bank of Korea has been delayed. At the TF meeting held on the 11th, the Financial Services Commission conveyed that the issues would be resolved soon, but within the Democratic Party there is also a strong current suggesting they may shift to lawmaker-initiated legislation if necessary.

The Democratic Party plans to review the contents of the government draft through a meeting with external TF advisory members on the 22nd and finalize the legislative direction of the Digital Asset Basic Act.