Democratic Party files bill to regulate overseas stablecoins…"Circulation allowed if Financial Services Commission requirements are met"

A bill that would restrict the domestic circulation of stablecoins (virtual assets pegged to fiat currencies) issued overseas is expected to be pursued. The plan is to establish a legal basis so that only stablecoins that meet the requirements set by the Financial Services Commission can be used domestically.

On the 4th, Lee Kang-il of the Democratic Party held a press conference at the National Assembly in the morning and announced he would file the Digital Asset Innovation Act containing these provisions. The bill includes matters such as stablecoins and token offerings (ICO).

Lee said, "The bill establishes an authorization system for stablecoin issuers and detailed regulations on the composition, custody and disclosure of reserve assets," adding, "Through this, we have worked to secure market trust and safety."

Lee explained, "The capital requirement for issuing stablecoins is set by presidential decree at 1 billion won or more," and added, "In addition, we will review the suitability of executives and major shareholders, the validity of business plans, conflict-of-interest prevention systems for users, and risk management capabilities." Audits of reserve assets and such will be made through annual disclosures.

In particular, Lee explained that, for the first time, the bill also specifies circulation requirements for overseas stablecoins. He said, "There have been many concerns recently about stablecoins issued overseas," and added, "Accordingly, to prevent overseas-issued stablecoins from circulating indiscriminately in the country, we plan to establish a legal basis that only allows the circulation of stablecoins that meet the requirements set by the Financial Services Commission." He added, "We will ensure there is no regulatory arbitrage between stablecoins issued domestically and those issued overseas."

At a subsequent press briefing, Kim Hyo-bong, a lawyer at law firm Bae, Kim & Lee, emphasized, "Two aspects of the regulation on overseas stablecoins must be stipulated by presidential decree." Kim served as an adviser on this Digital Asset Innovation Act.

He elaborated, "Policy authorities must decide whether authorization for overseas stablecoins should be obtained through a domestic corporation or whether approval of eligible overseas markets can be accepted as an alternative. The financial authorities should also closely examine whether reserve assets are held domestically."