According to a new report from Herald Economy, South Korea is preparing to open up the crypto market to corporate investors, but stablecoins like USDT and USDC may be left out of the rulebook.
The country’s financial watchdog says that stablecoins, in particular, conflict with existing currency laws that do not recognize them as official means of payment. Regulators are also concerned about early-stage market risks.
South Korea’s foreign exchange transaction law requires that all international transactions be made through foreign exchange transaction banks.
Since stablecoins are not legally classified as legal instruments of foreign payment, allowing companies to hold them could allow businesses to send payments directly abroad and bypass the country’s currency control framework, the report noted.
Proposed changes to the Exchange Act that would classify stablecoins as means of payment are currently under consideration, but until approved, their use will remain restricted.
South Korea’s crypto space has long been dominated by retail investors, but the authorities’ introduction of Corporate Virtual Trading Guidelines will allow institutional players to enter the market after the expiration of the Digital Asset Master Act.
Under the framework, companies can hold cryptocurrency assets such as Bitcoin and Ethereum, similar to how some companies in Western markets manage digital assets on their balance sheets.
While stablecoins face currency hurdles in South Korea, in the US, policymakers are finalizing a unified framework for digital asset markets.
However, the legislation, known as the CLARITY Act, faces obstacles due to ongoing tensions between banks and crypto companies over the issue of stablecoin yields.
