South Korea draft bill puts stablecoins, RWAs under finance laws: Report

The draft proposal from South Korea’s ruling party reportedly bars stablecoin interest and calls for technical standards to ensure interoperability across blockchain networks.

South Korea’s ruling Democratic Party is reportedly preparing a draft bill that would classify stablecoins as foreign exchange payment instruments and require tokenized real-world assets (RWAs) to be backed by assets held in trust. 

Citing an integrated draft of the proposed Digital Asset Basic Act, the Seoul Economic Daily reported on Wednesday that stablecoins used in cross-border transactions would be treated as “means of payment” under the Foreign Exchange Transactions Act, placing related businesses under oversight even without separate registration.

The draft bill would also require issuers of tokenized RWAs to place underlying assets in managed trusts under the Capital Markets Act. 

If implemented, the changes would bring stablecoins and tokenized RWAs under existing financial rules, tightening oversight of cross-border flows and setting custody requirements for underlying assets.

Cointelegraph could not independently verify the draft provisions through a public National Assembly filing as of Wednesday. 

The Seoul Economic Daily also reported that the draft would exempt certain stablecoin payments for goods and services from foreign exchange reporting requirements within a defined scope.  

The draft also reportedly bars issuers from paying interest to holders of value-stable digital assets, regardless of how the incentive is labeled. It would also require the Financial Services Commission to establish technical standards aimed at ensuring interoperability across digital asset networks, the report said.

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The reported approach aligns with earlier concerns raised by South Korea’s central bank.

On Jan. 27, Bank of Korea Governor Lee Chang-yong warned that Korean won-denominated stablecoins could complicate capital-flow management and foreign exchange stability, adding to the debate over how domestic stablecoins should be regulated.

On the RWA side, the draft would reportedly require issuers to place linked assets in managed trusts under the Capital Markets Act. The requirement would tie tokenized asset issuance to existing custody frameworks, according to the report. 

According to the report, key issues like exchange ownership limits and bank-related requirements for stablecoin issuers were not included in the draft.

The omissions come amid broader disagreements over how the bill should regulate stablecoins. On Dec. 31, disagreements over stablecoin oversight and issuer requirements had delayed the Digital Asset Basic Act.

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Source: CoinTelegraph