The Central Bank of South Korea (BoK) wants to regulate stablecoins as they have the potential to undermine financial stability and need tighter regulation than other digital assets, according to a report the bank released on Monday.
The report of the Central Bank of Korea reflects the concerns of different countries around the world that are preparing proposals to regulate stablecoins.
The report argues that stablecoin issuers should have minimal capital and reserve assets to minimize the likelihood of digital assets transferring their risks to the payment and settlement system.
South Korea Central Bank: “Cryptocurrency Businesses Must Register with the Central Bank”
Moreover, cryptocurrency businesses must be registered and authorized to operate and be subject to regular external audits.
The report stated that cryptocurrencies should be regulated by a special law because the issuance structure and market system are different from securities and fiat currencies and are difficult to address with current regulations.
Politicians in the country are trying to establish a comprehensive regulatory framework for cryptoassets, but the political stalemate over the national budget has stalled debate over crypto-related bills.
The May collapse of South Korean stablecoin issuer Terraform Labs prompted the country’s policymakers and legislators to scrutinize the local crypto industry.
As it is known, the collapse of Terra was triggered by the fact that the value of the stablecoin UST in the ecosystem fell below $ 1. However, there is also data that the company secretly sold UST in April.
*Not investment advice.
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