South Korean lawmakers call for formal framework for stablecoins

South Korean lawmakers have called on the country to quickly move forward with the institutionalization of stablecoins to protect payment sovereignty. The move will also help South Korea maintain its competitiveness in a rapidly changing financial system, said Democratic Party of Korea lawmaker Min Byung-deuk.

The South Korean lawmaker made this known while speaking at the final session of the 8th Global Business Forum, hosted by Herald Business in Seoul. He called on the South Korean government to work with traditional financial institutions to accelerate efforts to legalize and expand the use of stablecoins in the country. South Korean lawmakers also warned that as global payment standards evolve, vulnerable people could be left behind if South Korea lags behind.

South Korean legislators request government to institutionalize stablecoins

Min, a member of the National Assembly Political Affairs Committee and a central figure in South Korea’s cryptocurrency policy discussions, said stablecoins are now here to stay. “Stablecoins are no longer a question of whether we should adopt them or not,” he said. “The only question that remains is how fast and how well do we do it?” Ming explained that stablecoins are an essential tool for cross-border payments, trade settlements, and remittances.

The South Korean lawmaker also emphasized that stablecoins tied to the value of the US dollar have now become tools used in global commerce. He warned that if the South Korean government fails to approve the development of a won-backed stablecoin by the deadline, it could lead to an erosion of monetary sovereignty. Min pointed out that stablecoins pegged to the dollar are now a new form of currency adopted by governments.

The lawmaker highlighted the characteristics of these forms of money, noting that they are faster and cheaper when used for cross-border transactions. Min added that Korean companies may soon face the dilemma of having to accept dollar-backed stablecoins for overseas transactions, regardless of national policy preferences, noting that there are already signs that things are changing in this regard domestically.

Companies are now adopting dollar-pegged stablecoins

Small and medium-sized enterprises in South Korea are currently paying foreign workers in dollar-based stablecoins according to their requests. Meanwhile, other companies are considering using stablecoins for international payments. Min stressed that these practices will soon become routine as the risks of foreign stablecoins become entrenched in everyday transactions before domestic regulations are introduced to govern their use in certain aspects of the country.

“At that time, monetary sovereignty will disappear,” Min warned, adding that it would be difficult to overturn payment standards once widely adopted. Despite growing calls for regulation of this aspect of the market, the South Korean government has yet to finalize a regulatory framework for digital assets. Until now, authorities have focused on consumer protection and have put in place several anti-money laundering guardrails in line with the Virtual Asset User Protection Act.

Policy debates are now moving towards more structural legislation. Regulators and lawmakers are currently preparing a framework called the Digital Asset Basic Law, which is currently in its second phase. This will formally recognize digital assets, define their legal status, and establish principles governing their issuance and use beyond speculative trading. Min emphasized that in this case, the Won-backed stablecoin serves as a defensive tool and a growth strategy.

Min also emphasized that the Korean government should consider developing stablecoins with various use cases that can leverage the country’s strengths, rather than developing a won-backed stablecoin that competes with dollar-backed stablecoins. “If we create a stablecoin that is particularly useful for cultural payments and small and medium-sized enterprises, and convert users from all over the world into repeat customers, South Korea will be able to secure a significant share of the market,” he said.

The forum was also attended by Deputy Minister Sarah McDowell of the New Zealand Embassy in Seoul. In her welcome address, she emphasized the need to expand bilateral trade relations, noting New Zealand is open and willing to do business. Mr McDowell added: “Since the free trade agreement came into force 10 years ago, two-way trade has more than doubled and South Korea is now New Zealand’s fifth largest trading partner.”