South Korea Moves to Regulate Won-Based Stablecoin with New FSC Bill

South Korea’s Financial Services Commission (FSC) is all set to unveil a new bill in October aimed at regulating won-denominated stablecoins, Money Today reported. 

The bill is part of the second phase of the Virtual Asset User Protection Act, and will set rules for issuance, collateral management, and internal controls. 

FSC to Submit Stablecoin Bill by October

At a forum about won-denominated stablecoins, Democratic Party lawmaker Park Min-gyu said he recently got a report from the FSC, outlining the plans for stablecoins. The government is expected to submit its proposed legislation to the National Assembly around October.

Since last November, the FSC has been working on the second phase of the Virtual Asset User Protection Act, aiming to finalize the bill in the second half of this year. 

Growing Push For Won-Based Stablecoins

Won-denominated stablecoins are becoming a hot topic in South Korea.

President Lee Jae-Myung promised them during his campaign, and lawmakers are drafting bills to make them a reality. As the US strengthens its dollar-backed stablecoin system, South Korea’s crypto industry is pushing for won-denominated stablecoins to boost domestic control and reduce reliance on the dollar.

Won-Stablecoin Bills Advance in Parliament

Several bills on won-based stablecoins are moving through South Korea’s parliament.

Key proposals include Min Byung-deok’s Digital Dasan Framework Act, Ahn Do-geol’s Value-Stable Digital Assets Act, and Kim Eun-hye’s Payment Innovation Act. These discussions are expected to gain more momentum once the FSC releases its government-backed bill, alongside these lawmakers’ proposals.

South Korea and Japan Race Ahead

Previously in June, Eight major South Korean banks revealed plans to launch a stablecoin pegged to the won. A joint venture could be launched by the end of this year or early next year, once legal regulations are in place.

Meanwhile, Yonhap reported that the four big banks, KB Kookmin, Shinhan, Hana, and Woori, are considering meetings with Circle President Heath Tarbert, who will visit Korea next week. 

Japan is also moving toward its first yen-based stablecoin. Nikkei reported that fintech firm JPYC could receive regulatory approval to issue it as soon as this fall.

BOK Governor Urges Caution

However, experts have also voiced concerns over potential risks.

Bank of Korea’s governor recently warned about the risks of won-based stablecoins. He says that only licensed banks should should issue the stablecoin to avoid currency risks. While Senior Deputy Governor Ryoo Sang-dai said won-based stablecoins should start with regulated banks and later expand to non-banks.