"Only Domestic Companies Regulated?"...Industry Pushback Against Stablecoin Licensing System

'Digital Asset Basic Act' to be Proposed Next Month

Mandatory Financial Services Commission Approval for Stablecoins

Industry Complains of "Discrimination Against Domestic Companies"

"Need to Clarify Usage and Issuing Entities First"

The 'Digital Asset Basic Act', which includes mandatory pre-approval from the Financial Services Commission for issuing stablecoins, is set to be proposed next month, raising concerns about fairness and effectiveness within the domestic virtual asset (cryptocurrency) industry.

According to industry sources on the 14th, Min Byung-deok, a member of the Democratic Party of Korea, plans to propose the 'Digital Asset Basic Act' next month, which comprehensively covers the issuance, distribution, disclosure, and self-regulation system of stablecoins and virtual assets. According to the draft, stablecoins will require approval from the Financial Services Commission to be created, whereas general virtual assets can be created with just a pre-issuance report.

The virtual asset industry acknowledges the need for a system but criticizes the unfairness of requiring licenses only from domestic companies while foreign companies operate without regulation.

An industry insider stated, "Currently, dollar-based offshore stablecoins like Tether (USDT), which are not subject to domestic regulations, are actively traded on domestic virtual asset exchanges," and criticized, "Applying licensing requirements only to domestic companies without any regulation on foreign issuers is unfair."

He emphasized, "The domestic blockchain industry has been virtually stagnant due to regulatory gaps. If related legislation is established now, at least initially, a system design favorable to domestic companies is needed," and added, "Regulations should be designed to provide opportunities rather than stifle the industry."

There are also calls for a clear definition of the scope of use and definition of stablecoins.

Another industry insider argued, "If regulations are introduced without a clear economic use case, as seen in past security token (STO) cases, they may lack effectiveness," and insisted, "A definition of the use cases for stablecoins, such as payments, remittances, and business-to-business transactions, must be established first."

He continued, "The current draft seems to reference the European Union's 'MiCA' regulations, but domestically, the actual use of stablecoins is practically limited to the Tether market within exchanges," and explained, "Rather than simply transplanting foreign cases, a phased system design considering domestic realities is necessary."

Additionally, he pointed out the need for discussion on the issuers of stablecoins. He said, "Whether the issuer will be a foundation or a financial institution needs to be defined," and suggested, "A systematic model based on a Money Transmitter License, like Circle (USDC) in the United States, could be considered."

He added, "The institutionalization of Bitcoin expanded step by step from allowing trusts to approving ETFs and direct handling by financial institutions," and concluded, "A realistic institutionalization strategy for stablecoins is also necessary. This is not an issue that can be resolved through a few meetings."