Korea Weighs Stablecoin Compromise Amid Digital Asset Framework Delay

South Korea's lawmakers are considering compromise on stablecoin regulations as they work to finalize the country's first comprehensive digital asset framework. The Digital Asset Basic Act, which would cover stablecoins, issuance, disclosures, and market rules, has been delayed due to disagreements over stablecoin issuance.

The report from Hashed Open Research and the Solana Policy Institute recommends providing interim licensing guidance for stablecoin issuers and phasing in regulation before completing the Digital Asset Basic Act. This approach would allow greater flexibility for stablecoin issuers, similar to the European Union's phased rollout of the Markets in Crypto-Assets Regulation.

Kim Hyobong, a partner at Bae, Kim & Lee, urged South Korea to clarify which crypto activities financial institutions may conduct and set rules for foreign-issued stablecoins. He also suggested that policymakers consider a compromise under which banks would retain majority ownership while fintech and non-bank firms managed operations.

The Digital Asset Basic Act aims to establish a comprehensive digital asset framework in South Korea, but lawmakers have yet to reconcile multiple bills. The report's recommendations suggest that the country is taking steps towards clearer regulations for stablecoins and other digital assets.