South Korea’s Ministry of Strategy and Finance announced on October 8 that it is reviewing measures to regulate stablecoins more strictly.

This decision comes amidst increasing criticism that stablecoins are emerging as a hidden threat in the foreign exchange landscape due to inadequate government oversight.

Rising Cross-Border Use and Industry Criticism

According to local media reports, the Ministry highlighted that stablecoins are primarily used for transactions and exchanges in the virtual asset ecosystem, with their role in cross-border transactions increasing.

The officials believe that these functions may soon extend to being major payment and transaction means in the real economy.

The Financial Services Commission (FSC) has also decided to prioritize stablecoins in the second legislative phase of the Virtual Asset User Protection Act (VAUPA). A spokesperson for the FSC stated, “We plan to consult with relevant ministries by referring to legislative cases in Japan, the European Union (EU), etc.”

These efforts come amid growing discontent among industry experts who argue that the nation has been slow to react to the increasing use of stablecoins in trade transactions. Critics argue that the government is only now reviewing related laws due to concerns about gaps in macroeconomic policy operations.

Stablecoins have gained prominence in the global capital market. Tether holds U.S. Treasury bonds worth $97.6 billion, inching closer to South Korea’s holdings of $116.7 billion, which ranks 18th globally.

In light of this, the nation’s government is compelled to apply foreign exchange regulations to transactions. A government official remarked,

“Stablecoin regulations will begin with establishing a system for issuing won-pegged coins.”

South Korea’s Regulatory Framework

Unlike South Korea, the EU and Japan have