The Bank of Korea (BOK) claimed it needs the authority to monitor and supervise stablecoins, according to the South Korean central bank’s report published on Monday as part of the country’s push to establish a comprehensive cryptocurrency regulatory framework.
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Fast facts
- BOK warned that stablecoins pose a threat to financial stability as they may undermine its monetary sovereignty and policies if the fiat-pegged cryptocurrencies become widespread payment instruments.
- The central bank argued that stablecoins pegged to foreign currencies must abide by foreign exchange laws, while those pegged to the local currency, the Korean won, fall under the purview of the BOK.
- A stablecoin is a cryptocurrency that has its prices pegged to that of different assets, often to fiat currencies.
- Last month, the BOK completed the second stage of its blockchain-based central bank digital currency (CBDC) research project, which focused on testing out the feasibility of a CBDC for payments.
- South Korea has been pushing to establish comprehensive law for the local crypto sector named the “Digital Asset Basic Act” since 2021.
- The country’s financial authorities and legislators recently delayed scheduled discussions on preventing unfair trade and protecting digital asset investors, which is intended to precede advancements of South Korea’s comprehensive crypto rule, the “Digital Asset Basic Act.”
- The May crash of the South Korea-born crypto project, Terra-LUNA, catalyzed the acceleration of local crypto regulations in the peninsula.
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