S.Korea central bank puts hand up to regulate stablecoins

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The Bank of Korea (BOK) claimed it needs the author­i­ty to mon­i­tor and super­vise sta­ble­coins, accord­ing to the South Kore­an cen­tral bank’s report pub­lished on Mon­day as part of the country’s push to estab­lish a com­pre­hen­sive cryp­tocur­ren­cy reg­u­la­to­ry framework.

See relat­ed arti­cle: S.Korea’s top reg­u­la­tor says dig­i­tal assets, vir­tu­al assets are different

Fast facts

  • BOK warned that sta­ble­coins pose a threat to finan­cial sta­bil­i­ty as they may under­mine its mon­e­tary sov­er­eign­ty and poli­cies if the fiat-pegged cryp­tocur­ren­cies become wide­spread pay­ment instruments. 
  • The cen­tral bank argued that sta­ble­coins pegged to for­eign cur­ren­cies must abide by for­eign exchange laws, while those pegged to the local cur­ren­cy, the Kore­an won, fall under the purview of the BOK. 
  • A sta­ble­coin is a cryp­tocur­ren­cy that has its prices pegged to that of dif­fer­ent assets, often to fiat currencies.
  • Last month, the BOK com­plet­ed the sec­ond stage of its blockchain-based cen­tral bank dig­i­tal cur­ren­cy (CBDC) research project, which focused on test­ing out the fea­si­bil­i­ty of a CBDC for payments. 
  • South Korea has been push­ing to estab­lish com­pre­hen­sive law for the local cryp­to sec­tor named the “Dig­i­tal Asset Basic Act” since 2021.
  • The country’s finan­cial author­i­ties and leg­is­la­tors recent­ly delayed sched­uled dis­cus­sions on pre­vent­ing unfair trade and pro­tect­ing dig­i­tal asset investors, which is intend­ed to pre­cede advance­ments of South Korea’s com­pre­hen­sive cryp­to rule, the “Dig­i­tal Asset Basic Act.”
  • The May crash of the South Korea-born cryp­to project, Ter­ra-LUNA, cat­alyzed the accel­er­a­tion of local cryp­to reg­u­la­tions in the peninsula.

See relat­ed arti­cle: S. Korea mulls require­ment for dig­i­tal asset exchanges to com­pen­sate sud­den with­draw­al suspension

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