South Korea’s central bank says it plans to play an active role in shaping stablecoin regulations to address potential financial risks.
The Bank of Korea has announced its intention to take a proactive role in shaping the government’s regulations on crypto usage in the country.
In its “2024 Payment and Settlement Report,” the bank plans to provide input on stablecoin usage. This follows the South Korea Financial Services Commission’s announcement that it will begin drafting the second crypto law later this year.
The report highlights payment trends and analysis in Korea’s payment sector for 2024, along with the Bank of Korea’s supervisory activities and potential policies.
Bank of Korea Intends to Actively Participate
The central bank has determined that its input is essential to mitigate potential monetary and financial risks associated with stablecoins. The Bank of Korea emphasized in its report that a strong regulatory framework is important for stablecoins, as they can be used as a means of payment, unlike other digital assets.
They also added that if stablecoins become a means of payment in Korea, it could negatively affect monetary policies.
The national bank believes that stablecoins are not as immune to volatility as some enthusiasts claim and could introduce crypto-related risks to South Korea’s financial ecosystem.
South Korea Develops Additional Regulatory Guidelines
In July 2024, South Korea introduced a law to regulate cryptocurrency usage, tightening rules for crypto exchanges. The government has now decided to create a complementary legal framework for stablecoins, offering clearer guidelines on token listings and addressing gaps in existing regulations.
South Korean financial authorities are also set to impose sanctions on overseas crypto exchanges operating without proper licenses.
With the growing involvement of South Korea in crypto regulations, particularly after significant global shifts such as Trump’s presidency, the country is increasingly becoming an important player in the crypto space. It will be interesting to watch how South Korea’s regulatory trajectory evolves in the coming years.
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