"The Appeal of KRW Stablecoins is Low... Overall System Overhaul Needed"

It has been diagnosed that accounting standards, taxation, and overall system overhaul are necessary for the issuance and activation of KRW stablecoins. It is pointed out that under the current system, it is difficult for companies to issue stablecoins and for individuals to practically utilize them.

At the 'Blueprint for KRW Stablecoins for Digital G2' seminar held at the Hashed Lounge in Gangnam on the 28th, Lee Jae-hyuk, a partner accountant at PwC Samil Accounting Corporation, stated, "The attractiveness of KRW-based stablecoins is relatively low at present," and "To induce individual demand, companies must first be able to participate, and institutional supplementation is urgently needed for this."

The accountant said, "To use stablecoins as a means of transaction, 'good faith acquisition' must be possible. Under current law, there are restrictions on asserting property rights for stablecoins, and major global countries are pursuing legal amendments in this regard," adding, "Korea should also join this trend."

He also pointed out that the current system imposes practical restrictions on the real use of stablecoins by companies. He said, "Since stablecoins are classified as virtual assets, even if a corporation opens an account, they must practically be stored through a custody company," and "Most of these assets are stored in cold wallets, which takes considerable time to withdraw. It is practically difficult to use them as a means of transaction," he pointed out. He further suggested, "To resolve this, a payment business license should be granted within virtual asset businesses, or the system should be overhauled to allow self-custody."

There were also concerns that stablecoins could be used as a means to evade VAT. The accountant said, "Countries like Australia and Singapore classify stablecoins pegged to specific assets as derivatives and consider them tax-exempt," and advised, "A system design that considers the possibility of VAT evasion as a means of abuse is needed domestically as well."

Additionally, he warned that there is a blind spot in the current stablecoins regarding anti-money laundering (AML) and cross-border capital outflow monitoring. The accountant explained, "Korea will also participate in CARF (Cross-border Virtual Asset Transfer Information Sharing System), an international cooperation system, from next year," but "Currently, only centralized virtual asset service providers (VASPs) are subject to it, so it is still difficult to grasp decentralized finance (DeFi) or peer-to-peer transactions."

He added, "To supplement this, it is necessary to establish a 'virtual asset cross-border transfer reporting system' within the Foreign Exchange Transactions Act or the Electronic Financial Transactions Act, or to automatically collect transaction metadata through an API connection between issuers and DeFi."