Stablecoin Regulation: South Korea’s Crucial Review Impacts Digital Finance

Key Points

1. The South Korean Ministry of Economy and Finance (MOEF) is conducting a comprehensive review to apply the Foreign Exchange Transactions Act to stablecoins, focusing on their regulation.

2. Stablecoins, such as USDT, may face stricter scrutiny under foreign exchange laws, including transaction limits and reporting requirements.

3. The regulation could impact cross-border transfers, requiring more documentation and compliance with KYC/AML rules, potentially altering user experience and transaction speed.

4. Other stablecoins like USDC, BUSD, and DAI might also be subject to similar regulations if they maintain a peg to fiat currencies.

5. The move aims to balance innovation with necessary oversight, ensuring stablecoins do not outpace regulatory frameworks while integrating into the traditional financial system.