South Korea is preparing to open the crypto market to corporate investors, but stablecoins like USDT and USDC may be left out of the rulebook, according to a new report from Herald Economy.
The country’s financial watchdog says including stablecoins would conflict with existing foreign exchange laws that do not recognize them as official payment instruments. Regulators are also concerned about early-stage market risks.
South Korea’s Foreign Exchange Transactions Act requires all international transactions to be conducted through licensed foreign exchange banks.
Since stablecoins are not classified as legitimate foreign payment tools under the law, permitting companies to hold them could allow businesses to send payments abroad directly, sidestepping the country’s FX control framework, as noted in the report.
A proposed amendment to the Foreign Exchange Act that would classify stablecoins as payment instruments is currently under review, but until it is approved, their use remains restricted.
South Korea’s crypto space has long been dominated by retail investors, but the authorities’ upcoming introduction of the Corporate Virtual Currency Trading Guidelines would allow institutional players to enter the market once the Digital Asset Basic Act is finalized.
Under the framework, companies could potentially hold crypto assets such as Bitcoin and Ethereum, similar to the way some firms in Western markets manage digital assets on their balance sheets.
While stablecoins run into foreign exchange barriers in South Korea, in the US, policymakers are finalizing a unified framework for digital asset markets.
However, the legislation, also known as the CLARITY Act, faces obstacles due to ongoing tensions between banks and crypto firms over the issue of stablecoin yields.