• South Korea is gradually making its stablecoin market rules stricter.
• Politicians are advocating for a bank-led model and, thus, are asking for a majority control of 51% by banks.
• The government’s postponements are putting more stress on the situation as the law-making process is about to conclude.

The regulation of stablecoins has become a central issue in South Korea’s discussions. There is a strong need for action in the capital city. Legislators are holding prolonged and poorly lit meetings trying to figure out what rules should govern a digital world that is always changing.

The main word around which the whole issue revolves is stablecoin. It is silent, far away, and very much a technical matter. However, it still carries the burden of a network that cannot be allowed to disintegrate.

Now South Korea is doing the groundwork for the second phase of the Digital Asset Basic Act. The risks are enormous. The coalition party together with the Financial Services Commission have already taken the step of reopening old disputes in order to create a strong law that can weather the strongest of political storms.

Also Read: South Korea Tightens Crypto AML Rules Amid Growing Smurfing Concerns

Clash of Stablecoins

There is one matter that the government and the National Assembly share a consensus on, the initial draft law did not suffice. It was user-friendly but did not subdue the broader frontier. Therefore, they went deeper, exploring uncharted territory with a second-stage bill intended to encircle the whole ecosystem.

Nevertheless, it was the issuance of stablecoins that turned out to be the battlefield. The Bank of Korea wished for banks to control the situation totally. On the other hand, some people believed that fintech and blockchain companies should be allowed to participate. This confrontation was the reason behind the repeated delays of the government’s proposal.

The ruling party, as of now, is of the opinion that the impasse is no longer a thing. It appears that a silent agreement has developed. Issuers are going to be confined to one group where the banks would own no less than 51% of the stock. It is quite a significant step back towards caution. A message that the old-timers have to provide the stability even in the new world.

Rep. Kang Jun-hyun, the one pushing for political affairs, expressed that the coordination is seemingly finished. He acts as if he is a man with a very tight deadline. His office has declared the 10th as the final day for the authorities to present the government’s ultimate plan.

Nevertheless, the Financial Services Commission is still taking a conservative approach. Through a press release, it declared that nothing has been settled. Just that the objective is obvious: hurry up with the plan and aid the legislators in the legal framework.

Stablecoin Rules Against the Clock

Bunch of digital asset bills are already in front of the lawmakers’ table. They project the future of the industry through the lenses of innovation, integration, and transition. However, they are incomplete without the backing of the government. Moreover, the increment of the pressure is due to each day of delay.

Rep. Kang thinks that the discussion will continue into January. There is little time, and even less consensus. Yet, he is adamant that the labor has to be initiated right away. No plan, no law; no law, only drifting.

South Korea’s digital markets are struggling with chaos and the country is eager to bring in trust as the main thing to support the increasing demand. Thus, the government advances steadily, slowly, and with strong determination, laying down a stablecoin regulation that would eventually get the whole thing sorted out.

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