The Bank of Korea to Actively Participate in Stablecoin Regulatory Framework

The Bank of Korea has stated that it will actively participate in developing regulations for stablecoins to mitigate potential risks to monetary and financial stability. South Korea is in the process of drafting the second part of cryptocurrency legislation, which will focus on transparency requirements for stablecoins and crypto services. In a payment system report released on Monday, the Bank of Korea said, "Unlike general virtual assets, stablecoins inherently have the characteristics of payment instruments. If their usage expands, it could weaken the effectiveness of monetary policy." The central bank also noted that stablecoins could transmit the risks of crypto-related crises to traditional financial markets, threatening the integrity of financial stability and payment settlement systems. South Korea is currently working on the subsequent legal framework for its first cryptocurrency law, which will take effect in July 2024, emphasizing the protection of cryptocurrency investors through stricter requirements for exchanges.