In a significant move towards establishing a regulated cryptocurrency market, South Korean President Lee Jae-myung’s Democratic Party has submitted a bill to parliament permitting qualified companies to issue stablecoins. This legislative initiative, known as the Digital Asset Basic Act, aims to enhance transparency and foster competition within the ever-evolving realm of digital currencies, as reported by Bloomberg.
As proposed, the bill mandates that companies looking to issue their own stablecoins must have a minimum equity capital of 500 million won (approximately $368,000) and must secure approval from the Financial Services Commission. Additionally, these companies must be able to offer refunds through their reserves, providing a layer of protection for investors.
Since his election last week, President Lee has made several commitments to South Korea’s crypto industry, targeting the nation’s 15 million crypto investors. He emphasized the necessity to develop a won-based stablecoin market, which he argues is pivotal for retaining national wealth amid concerns of capital outflow to overseas markets, as noted by the Korea Herald.
Stablecoins, defined as tokens pegged to the value of traditional financial assets, such as fiat currencies, provide a stable alternative to the often erratic nature of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). By offering price stability, stablecoins allow users to engage with digital assets without the anxiety associated with major price fluctuations.
This year, interest in the sector has surged, largely driven by ongoing regulatory advancements in the U.S. For example, the potential bipartisan support for U.S. stablecoin regulations could lead to wider acceptance and utilization of these digital currencies.
The recent robust performance of Circle’s stock (CRCL), following its initial public offering (IPO), exemplifies the growing strength of the stablecoin market. Observations indicate that Circle’s shares quadrupled over the first three days of trading. Furthermore, the market capitalization of the stablecoin sector has reached an impressive $250 billion for the first time, reflecting the rising confidence and participation in this innovative financial domain.
