South Korea’s government and the Bank of Korea are preparing to amend the Foreign Exchange Transactions Act this year so that stablecoins can be regulated when used as payment instruments, according to local news outlet Digital Asset.
The central bank said it is working with the government on measures covering cross-border transactions involving digital assets. It plans to jointly draft legislation within the year that would update the foreign exchange law and introduce rules for stablecoins used as a means of payment.
The proposed changes would also include a system for monitoring virtual assets.
The move follows a National Assembly audit last year, when lawmakers called on the Bank of Korea to bring domestic payment infrastructure closer to global standards. Their requests included extending the operating hours of large-value payment systems until 8 p.m. and creating safeguards against money-laundering risks associated with the arrival of global crypto exchanges in South Korea.
The Bank of Korea said digital assets can facilitate international transfers without going through traditional financial institutions. It also pointed to the role of mixers and unhosted wallets in increasing user anonymity, warning that these features can make it easier to conduct illegal activities.
The central bank said it would prioritise the creation of an international cooperation framework to counter unlawful transactions involving digital assets.
South Korea is separately working on the Digital Asset Basic Act, which is intended to provide a comprehensive legal structure for the crypto sector. The legislation is expected to cover licensing requirements for exchanges as well as rules governing the issuance of stablecoins.
Lee Eog-weon, chairman of the Financial Services Commission, said at a hearing on Thursday that discussions on the bill were close to completion. He added that the government would seek to introduce the legislation as soon as possible.
The Bank of Korea said it would maintain consultations with relevant ministries while the Digital Asset Basic Act is being developed. The aim is to limit regulatory arbitrage that could emerge from temporary gaps in legislation during the process.
