Bank of Korea Plans Regulations for Stablecoins Under Forex Law

The Bank of Korea (BOK) is preparing to introduce amendments to the Foreign Exchange Transactions Act, in collaboration with the government, to regulate stablecoins. This initiative reflects the BOK's ongoing focus on enhancing the framework governing digital currencies and their transactions.

Regulatory Framework for Stablecoins

According to a report submitted for the National Assembly’s annual review, the central bank intends to classify stablecoins as recognized means of payment. This classification aligns them with established financial instruments that necessitate reporting for any cross-border movement.

While this plan is still in the drafting phase, it lays the groundwork for future legislative action. Currently, there is no completed draft or specified date for proposal. Notably, the term “means of payment” is clearly defined in South Korean forex law, implying that stablecoins could be subjected to oversight akin to international wire transfers.

Monitoring Digital Transactions

The BOK's report, dated October 22, indicates that discussions with the government are focused on monitoring systems for cross-border virtual asset transactions. The bank is also addressing concerns over illicit activities that could exploit shortcuts, such as online mixers and the use of anonymous personal wallets.

Self-custodial Bitcoin holders in Korea need to be aware that the country’s restrictions on foreign exchange could be tightened with this new regulatory framework, potentially reinforcing existing capital controls rather than alleviating them.

Context of Digital Asset Regulations

This regulatory effort is part of a broader initiative that includes the Digital Asset Basic Act, which aims to create a comprehensive licensing framework for the issuance of stablecoins. This regulatory structure was signaled as part of the government's 2026 growth strategy, highlighting the increasing importance of digital assets in financial planning.

During discussions with legislators, Financial Services Commission chairman Lee Eog-weon emphasized that consultations regarding the bill are nearing completion, paving the way for timely legislative developments.

Upcoming Crypto Tax Legislation

Meanwhile, South Korea is also advancing discussions surrounding its proposed crypto income tax, set to be implemented on January 1, 2027, following multiple delays. Lawmakers have expressed concerns about the need for clear tax regulations before enforcing a tax on cryptocurrencies.

Lee advocates for a nuanced approach to taxation that accounts for various market conditions, urging a thorough final review. In a noteworthy event, two public petitions calling for either the repeal or postponement of this tax have successfully gathered enough support to prompt legislative consideration.

As of now, the National Tax Service is set to finalize its draft tax notice by October 30, marking a crucial milestone in the ongoing evolution of cryptocurrency legislation in Korea.