Political Firestorm Erupts in South Korea Over Stablecoin Regulation—Who Will Control the Future of Crypto?
Seoul's political arena turns into a crypto battleground as ruling and opposition parties lock horns over stablecoin oversight. The stakes? Nothing less than the financial sovereignty of a nation racing toward blockchain dominance.
Behind the scenes: Lawmakers scramble to draft legislation that could make or break South Korea's $3.2B stablecoin market. Critics whisper this is just another power grab disguised as consumer protection—after all, when has a politician ever missed a chance to 'regulate' their way into relevance?
The irony? While bureaucrats debate collateral requirements, decentralized protocols quietly process 400% more transactions than last quarter. Sometimes the market votes with its wallet.
Reserve requirements and protections
The Democratic Party proposal requires 100% backing through cash, demand deposits, government bonds, or municipal bonds.
In bankruptcy scenarios, reserve assets WOULD be prioritized for user reimbursement within three business days and "cannot be seized or used as collateral," Ahn reportedly said.
"Like the U.S. with its digital dollar, Korea must enter a new era of financial sovereignty with a won-based stablecoin,” he said.
The People Power Party bill includes provisions for "matters related to the redemption of fixed-value digital assets and the composition and management of reserve assets," along with requirements for issuers to maintain financial and management soundness.
Bank of Korea Governor Rhee Chang-yong showed support for won-backed stablecoins last month while emphasizing the need to examine their impacts on foreign exchange management.
"The regulatory framework should focus on outcomes rather than prescriptive methods," Rich O. said, advocating for clear standards while allowing innovation in yield mechanisms and cross-border functionality.
