South Korean National Assembly proposes bill for the first time to include stablecoins under Foreign Exchange Transactions Act supervision

Jinse Finance reported, citing Yonhap News Agency, that Park Sung-hoon, a member of South Korea's People Power Party, will propose a bill to amend the Foreign Exchange Transactions Act to include stablecoins within the legally defined scope of payment methods. The bill aims to revise Article 3, Paragraph 1, "Definitions," to list stablecoins alongside government-issued paper money, banknotes, and coins as payment methods. Representative Park stated that although the potential of stablecoins pegged to fiat currency as a new payment method is recognized, due to their nature being different from existing fiat currencies, they are not identified as payment methods under the Foreign Exchange Transactions Act, resulting in a regulatory blind spot. This could lead to illegal foreign exchange transactions and tax evasion through stablecoins. The Bank of Korea has previously expressed similar concerns, noting that US dollar stablecoins could be used for cross-border current account and capital transactions without following the reporting procedures stipulated by the Foreign Exchange Transactions Act, and warning that the spread of stablecoins may make it easier to conduct illegal transactions that evade foreign exchange regulations. South Korea's Ministry of Economy and Finance expressed agreement with the bill, stating that it is working with the Financial Services Commission, the central bank, and other relevant institutions to discuss specific regulatory measures.