South Korea Central Bank Proposes Regulating Stablecoins

The Bank of Korea informed the legislature of its plan to draft an amendment to the Foreign Exchange Transactions Act later this year. The primary goal is to classify stablecoins as payment instruments under current law.

This measure does not grant legal tender status to digital assets in the country. The intention is to subject stablecoin usage to strict exchange controls by treating them like international bank transfers that require mandatory reporting to authorities.

The institution justifies the initiative by citing risks associated with settlements outside the traditional banking system. The use of transaction mixers and the lack of oversight on private wallets are key concerns raised by the central bank to curb illicit activities.

The project runs parallel to the Basic Act on Digital Assets which establishes guidelines for token licensing and issuance. The South Korean government is also discussing the implementation of taxes on crypto asset income which is scheduled to begin in January 2027.

Tighter regulation on exchange flows could intensify capital restrictions in South Korea. This may impact liquidity and the price premium of assets like Bitcoin in the local market.