The Bank of Korea (BoK) wants to play an active role in monitoring stablecoins, according to a report issued Monday. It singled out stablecoins as needing more stringent regulation compared to other crypto assets since they have the potential to undermine financial stability.
The BoK’s report echoes concerns of jurisdictions across the world who are currently drawing up proposals to regulate stablecoins.
The report argues for having stablecoin issuers meet requirements on minimum capital and reserve assets to minimize the possibility of risk transfer to the payment and settlement system.
It also said that crypto asset businesses should be registered and authorized to operate, come under regulations on capital requirements and be subject to regular external audits.
Cryptocurrency needs to be regulated through a special law as its issuance structure and market system are different from securities and currencies, making it difficult to respond with existing regulatory methods, the report said.
The country’s politicians are attempting to draw up a comprehensive regulatory framework for crypto assets, though partisan gridlock over the national budget has stalled discussions on crypto-related bills among others.
The collapse of stablecoin issuer Terraform Labs in May prompted South Korean policymakers and lawmakers to scrutinize the domestic crypto industry.
Read more: South Korean Regulator Plans to Look at Stablecoins’ Role in Money Laundering: Report
