The Bank of Korea (BoK) wants to monitor stablecoins, according to a report the bank issued Monday, singling out stablecoins as needing more stringent regulation than other digital assets because they have the potential to undermine financial stability.
The BoK’s report echoes concernsof jurisdictions across the world that are drawing up proposals to regulate stablecoins.
The report argues that stablecoin issuers should be required to have minimum capital and reserve assets to minimize the possibility that the risks of digital assets would be transferred to the payment and settlement system.
It also said that crypto-asset businesses should be registered and authorized to operate and be subject to regular external audits.
Cryptocurrency needs to be regulated through a special law because its issuance structure and market system are different from securities and fiat currencies, making it difficult to respond with existing regulations, the report said.
The country’s politicians are attempting to form a comprehensive regulatory framework for crypto assets, but partisan gridlock over the national budget has stalled discussions on crypto-related bills.
The collapse of South Korea-based stablecoin issuer Terraform Labs in May prompted the country's policymakers and lawmakers to scrutinize the domestic crypto industry.
