South Korea’s most senior financial regulator, the Financial Services Commission (FSC) Chairman Kim Byung-hwan, says the nation needs to move “quickly” to regulate stablecoins. But the FSC chief has concerns about the “strength” of the USD.
Per the South Korean media outlet Money Today, Kim said he agreed with lawmakers who called for the speedy rollout of “a regulatory system for stablecoins.”
FSC’s Stablecoin Concerns Remain?
Speaking to lawmakers, the FSC chief said:
“I am also of the opinion that stablecoin regulations need to be organized quickly, However, we need to consider that the dollar’s strength is currently being influenced by underlying factors. These include US interest rate hikes and strong American economic performance.”
Financial Services Commission Chairman Kim Byung-hwan. (Source: EDaily TV/Screenshot)Kim was speaking at a plenary session of the National Assembly’s Political Affairs Committee on February 18.
He responded to a question on stablecoins from the People Power Party lawmaker Yoon Han-hong, the Chairman of the National Assembly’s Political Affairs Committee.
The FSC chief’s comments appear to suggest that Kim and the FSC are still on course to launch stablecoin regulations later in the year.
Lawmakers and financial regulators are currently working on “the second stage” of the Virtual Asset User Protection Act, a piece of crypto-related legislation that came into force in mid-2024.
Crypto advocates hope that regulators will include clauses on stablecoin regulations in this new bill.
Major South Korean firms hope to roll out USD-pegged coins in the very near future. Many are worried about falling behind their stablecoin-issuing tech rivals in the United States and elsewhere.
But regulators have continued to drag their feet about the issue, possibly due to ongoing political uncertainty around the presidency.
Lawmakers Still Unconvinced
Regulators and some lawmakers are hesitant to give companies the green light, with Yoon also expressing caution. The lawmaker said:
“To issue stablecoins, [South Korean firms] need to buy US Treasury bonds. That means they would need to give dollars to the Federal government. And this means dollars are flowing back to the US government and essentially disappearing. But our financial regulators are taking this concern too lightly.”
Kim’s response was also tinged with caution. He said:
“When talking about stablecoins, we need to evaluate whether the impact [of a stronger dollar] would have a big impact on the market or not. We will conduct a thorough review of the matter.”
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