Summary

  • South Korea’s Financial Supervisory Service said applying the Electronic Financial Transactions Act would be unavoidable if stablecoins are used as a means of payment.
  • The agency said a licensing regime is needed so electronic financial businesses can receive, hold and transfer stablecoins for payment and settlement purposes.
  • It also said coins used for interbank transactions on specific networks, such as JPMorgan’s JPM Coin, do not need to be regulated uniformly.

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South Korea’s Financial Supervisory Service said stablecoins used as a means of payment could be subject to the Electronic Financial Transactions Act.

Speaking at a seminar titled “Tasks After the Basic Digital Asset Act” at the Korea Financial Investment Association’s Financial Investment Education Institute on November 10, Shim Eun-seop, head of the FSS’s Electronic Financial Inspection Bureau, said applying the law would be unavoidable if stablecoins are used as electronic payment instruments. He said that would be needed to ensure parity with existing electronic payment instruments, protect users and safeguard payment and settlement stability.

Shim said a licensing regime is needed for electronic financial businesses seeking to run stablecoin-related operations. Under such a system, he said, electronic financial companies would be allowed to receive, hold and transfer stablecoins for payment and settlement purposes.

He added that rules covering safety standards, segregated management of user funds, personal data protection, dispute resolution and compensation liability should apply, except for some provisions that are difficult to impose directly because of the nature of blockchain transactions.

Still, Shim said there is no need to regulate all stablecoins in the same way. Coins used on specific networks for interbank transactions or corporate fund transfers, such as JPMorgan’s JPM Coin, do not need to be governed uniformly, he said. Shim added that authorities could also consider quickly revising the Electronic Financial Transactions Act or enacting an integrated payments law to support the commercialization of stablecoins.

Uk Jin