Ahn Do-geol: “Digital Asset Framework Act can’t be delayed any longer… bank-centric approach stifles innovation”

Ahn Do-geol, a lawmaker of the Democratic Party of Korea, said on the 16th that “bank-centered issuance of stablecoins will hinder innovation.”

Speaking at the forum “A Turning Point in Innovation Opened by the Institutionalization of Digital Assets,” held that day at the National Assembly Members’ Office Building in Seoul, Ahn said, “The success or failure of a won-denominated stablecoin depends on how quickly demand-side use cases are created,” adding that “if the issuing entity is limited to a specific industry (such as banks), stability can be secured, but it could also snuff out the shoots of innovation.” He added, “A more desirable direction is an open consortium in which banks are responsible for trust and stability, while non-financial firms such as fintechs handle innovation and growth.”

Financial authorities recently set a policy to allow stablecoin issuance by a bank-led consortium (equity stake of 50% plus one share). The Democratic Party, however, says the door should also be opened to non-bank players such as fintechs.

Ahn also addressed the controversy surrounding limits on major shareholders’ stakes in crypto exchanges. In the government draft of the Digital Asset Framework Act being prepared by the Financial Services Commission, a proposal to cap major shareholders’ stakes in exchanges at 15–20% is reportedly under serious consideration. Ahn said, “Given that (exchanges) are a form of market infrastructure and also have a public-good character, I sympathize with the underlying idea of setting an upper limit on ownership stakes,” but pointed out that “(however) imposing a cap could have side effects for fundraising and raise issues of misalignment with global standards.”

He also stressed the need to accelerate legislation. The Democratic Party’s work to enact the Digital Asset Framework Act has been unable to gain momentum as the financial authorities’ submission of the government draft has been delayed. Ahn said, “(Enacting the bill) can no longer be postponed,” adding that “the longer the regulatory vacuum lasts, the greater the cost of uncertainty, and innovation could fade.” He continued, “We will soon coordinate key issues to produce the ruling party’s bill and consult with the government,” and said, “We will push ahead with legislation quickly.”