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The head of South Korea’s top financial regulator, the Financial Services Commission (FSC) Chairman Kim Byung-hwan, has stated that the country needs to act “swiftly” to regulate stablecoins. However, the FSC chairman has expressed concerns regarding the “strength” of the USD.
According to the South Korean media outlet Money Today, Kim indicated his agreement with lawmakers advocating for the prompt establishment of “a regulatory framework for stablecoins.”
FSC’s Concerns About Stablecoins Persist?
During discussions with lawmakers, the FSC chairman remarked:
“I also share the view that regulations for stablecoins should be developed quickly. However, we must consider that the dollar’s strength is currently being affected by various underlying factors. These include US interest rate increases and robust economic performance in the United States.”
Financial Services Commission Chairman Kim Byung-hwan. (Source: EDaily TV/Screenshot)
Kim made these comments during a plenary session of the National Assembly’s Political Affairs Committee on February 18.
He was responding to an inquiry regarding stablecoins from Yoon Han-hong, a lawmaker from the People Power Party and the Chairman of the National Assembly’s Political Affairs Committee.
The remarks from the FSC chairman suggest that both he and the FSC remain on track to implement stablecoin regulations later this year.
Currently, lawmakers and financial regulators are working on “the second phase” of the Digital Asset Consumer Protection Act, a piece of crypto-related legislation that took effect in mid-2024.
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Proponents of cryptocurrency are hopeful that this new bill will include provisions for stablecoin regulations.
Major South Korean companies are eager to introduce USD-pegged currencies in the near future, with many concerned about lagging behind their stablecoin-issuing technological competitors in the United States and other regions.
However, regulators have been slow to address this issue, likely due to ongoing political instability surrounding the presidency.
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Lawmakers Remain Skeptical
“To issue stablecoins, [South Korean firms] need to acquire US Treasury bonds. This means they would have to provide dollars to the Federal government. Consequently, this results in dollars flowing back to the US government and essentially vanishing. However, our financial regulators are treating this concern too lightly.”
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250,000,000 #USDC (249,981,999 USD) minted at USDC Treasuryhttps://t.co/DE83fToQj9Kim’s response also carried a note of caution. He stated:
“When discussing stablecoins, we need to assess whether the impact [of a stronger dollar] would significantly affect the market. We will conduct a thorough evaluation of the issue.”
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