South Korea’s Stablecoin Legislation Hits Roadblock As FSC Misses December 10 Deadline
South Korea’s authorities has reportedly missed the deadline to submit its extremely anticipated stablecoin laws, risking a delay of the second part of the nation’s regulatory efforts to align with world requirements and foster innovation.
FSC Misses Key Deadline Amid BOK Disagreement
On Wednesday, native media shops affirmed that the South Korean authorities didn’t submit the long-awaited invoice for the Second Phase of the Virtual Asset User Protection Act, which is predicted to handle the issuance and distribution of won-denominated stablecoins.
Chosun Biz reported that the Financial Services Commission (FSC) didn’t meet the National Assembly’s submission deadline for the federal government’s laws. On December 1, authorities set December 10 because the deadline to submit the invoice to the National Policy Committee.
According to political circles cited by the report, the federal government invoice was delayed as a result of the FSC and the Bank of Korea (BOK) didn’t resolve their variations over the issuance of won-pegged stablecoins.
As reported by Bitcoinist, native shops acknowledged in late November that South Korea’s stablecoin laws risked being delayed on account of a disagreement between monetary authorities and the central financial institution over the extent of banks’ position.
The BOK and FSC seemingly agreed that the monetary establishments have to be concerned within the issuance of won-pegged tokens. However, the central financial institution has been pushing for a consortium of banks proudly owning a minimum of 51% of any stablecoin issuer looking for regulatory approval within the nation.
Meanwhile, the FSC was keen to contain numerous gamers within the course of, expressing concern that giving a majority stake to banks might scale back participation from tech companies and restrict the market’s innovation.
The November report famous that the regulatory standoff appeared to depart the market in limbo, with some tech corporations actively making ready to get approval and others taking a cautious strategy as a result of unclear regulatory path.
Stablecoin Legislation Risks ‘Prolonged Deliberation Process’
Chosun Biz famous that the Democratic Party of Korea (DPK) initially supposed to advance the second part of its digital asset invoice by reviewing the federal government invoice. Nonetheless, if the federal government draft continues to be delayed, the payments beforehand launched by lawmakers could possibly be reviewed first.
Since June, a number of payments related to the issuance and distribution of won-pegged stablecoins have been launched within the National Assembly. Min Byung-deok, a member of the National Assembly’s Government Committee, launched the “Digital Assets Basic Act, proposing enabling the issuance of won-pegged stablecoins and establishing a Digital Asset Committee underneath the direct authority of the president.
In July, South Korea’s ruling and opposition events proposed rival payments to determine the extremely anticipated regulatory framework. Notably, Ahn Do-gil, a member of the Planning and Finance Committee from the Democratic Party, launched the “Act on the Issuance and Distribution of Value-Stable Digital Assets.”
Similarly, Kim Eun-hye, a member of the Land, Infrastructure, and Transport Committee from the People Power Party (PPP), proposed the “Act on Payment Innovation Using Value-Fixed Digital Assets.”
The two payments shared similarities, just like the task of stablecoin oversight to the FSC. However, they differed over the problem of curiosity funds, with the PPP’s invoice permitting curiosity funds and the DPK’s invoice utterly banning them to forestall market disruption.
It’s price noting that the FSC chairman, Lee Eun-won, just lately affirmed that the regulatory company will “essentially prohibit the cost of curiosity on stablecoins as a precept,” adopting the identical precept because the US framework, the GENIUS Act, which prohibits curiosity funds on the holding or use of payment-purpose stablecoins.
Following the Wednesday delay, a member of the National Policy Committee from the Democratic Party affirmed that, “for now, it seems to be tough to slender the variations between the FSC and the BOK.”
“If the federal government invoice continues to not be submitted, the deliberation course of could possibly be extended, so we should always a minimum of evaluation the payments launched by lawmakers first,” they concluded.
