South Korea's Stablecoin Outflows Hit 18-Month Mark

South Korea's stablecoin outflows continue to break records, reaching $367 million in net transfers during June. This marks the country's 18th consecutive month of offshore stablecoin transactions across five major exchanges.

The trend is not only striking but also persistent, having endured for a year and a half despite changing market conditions. Market participants attribute these outflows to South Korean demand for products restricted or unavailable on local exchanges, including derivatives, tokenized assets, decentralized finance, and staking services.

Stablecoins are functioning as a bridge between the tightly controlled domestic market and a broader offshore menu of financial products. This has raised concerns among regulators, who struggle to apply consistent safeguards and track risks amidst the outflows.

Policymakers are working towards the Digital Asset Basic Act, which aims to establish South Korea's first comprehensive framework for stablecoin issuance, disclosures, and market conduct. However, progress remains delayed due to disagreements over which institutions should be allowed to issue won-pegged stablecoins.