[Post] The necessity of establishing a regulatory framework for stablecoins and overseas legislative trends

The Growth of Stablecoins and the Necessity of Regulation

Stablecoins are a type of digital asset linked to specific benchmark assets such as fiat currencies, gold, or cryptocurrencies, designed to minimize value volatility. Thanks to their price stability, they are widely used in payments, remittances, decentralized finance, and many other fields, and have become a foundational infrastructure of the global digital economy.

Stablecoins entail various regulatory and supervisory issues, including the risk of bank runs when reserves are insufficient, declines in collateral asset values, lack of transparency in issuer operations, and anti-money laundering (AML) and counter-terrorism financing (CTF) risks. Considering the international environment, it is also time for our country to formally discuss legislation for stablecoins.

Imperfections in the Domestic Legal System and the Need for an Independent Legal Framework

Currently, there is no specific regulatory framework for stablecoins in our country. The existing “Electronic Financial Transactions Law” could potentially cover stablecoins pegged to a single fiat currency, but since this law is based on a centralized management system, it cannot fully reflect the decentralized nature of blockchain technology. Stablecoins may conflict with laws related to foreign exchange controls, securities classification, and virtual asset issuance regulation. Therefore, establishing an independent legal framework for stablecoins is considered a more reasonable approach.

In stablecoin regulation, the scope of supervision is a key issue. Given that stablecoins are essentially borderless payment and settlement tools, some discussions suggest including and allowing domestic companies to issue foreign currency-pegged stablecoins other than the Korean won within the regulatory system. Additionally, how to regulate stablecoins pegged to the Korean won issued overseas is also an important topic.

Main Regulatory Trends in Major Countries

The US GENIUS Act not only permits banks but also allows non-bank institutions to issue dollar-pegged stablecoins, while imposing strict reserve audits and disclosure obligations on issuers.

The EU’s MiCA regulation simultaneously supervises fiat currency-pegged electronic money tokens and asset-backed tokens, with enhanced regulation for “significant tokens” that meet certain user count and transaction volume standards.

Singapore has established an independent regulatory framework for New Taiwan dollar and G10 currency-pegged stablecoins, clearly distinguishing domestic-issued tokens as “MAS-regulated,” and applying the existing digital payment token regulatory framework to overseas-issued stablecoins for circulation management, forming a dual system.

Hong Kong requires strict pre-issuance and circulation controls for stablecoins designated by the Hong Kong Monetary Authority.

These cases collectively emphasize key elements such as issuer licensing, reserve management, disclosure and auditing, AML, and CTF controls. These serve as important benchmarks for our country when designing a legal system for stablecoins.

Policy Implications

The core issue in domestic stablecoin legislation is to specify the conditions for authorized issuers. Issuers must have sufficient capital, liquidity, and payment capabilities, and establish internal control systems that include the eligibility of major shareholders and senior management. They must also improve technical control capabilities and meet reporting and registration requirements throughout the process of listing on exchanges, circulation, and payment settlement.

In particular, all stablecoin-related practitioners are required to fulfill AML and CTF obligations at the level of financial institutions. Customer identification, suspicious transaction reporting, record keeping, and sanctions list screening are mandatory. Given that cross-border remittances involving stablecoins have become commonplace, their compatibility with the “Foreign Exchange Transactions Act” must also be separately examined.

Stablecoins have the potential to become a core infrastructure of the digital economy. Amid rapidly changing global regulatory environments, our country also needs to establish an independent legal framework covering issuance, circulation, and regulation processes for stablecoins to balance market vitality and user protection.

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