South Korea proposes recognizing stablecoins as a payment method

South Korean lawmaker Park Sung-hoon from the People Power Party is preparing to introduce an amendment to the Foreign Exchange Transaction Act, with the aim of officially recognizing stablecoins as a legal method of payment.

This legislative move aims to address regulatory loopholes in current laws and prevent the use of stablecoins for illegal activities such as money laundering and tax evasion. The proposed amendment would add stablecoins to the definition of payment methods in Article 3, Section 1, granting them the same legal status as traditional payment instruments such as government-issued currency, banknotes, and coins. This initiative aligns with the concerns raised by the Bank of Korea, which recently submitted a written opinion to the National Assembly expressing worries about the potential risks of dollar-backed stablecoins. The central bank emphasized that these stablecoins could bypass the reporting procedures outlined in the Foreign Exchange Transaction Act, potentially being used for transactions related to current accounts and capital accounts between countries.