South Korea's Financial Supervisory Service: Stablecoins used as electronic payment means should be subject to the Electronic Financial Transactions Act.

November 10 — According to Yonhap News Agency, Shim Eun-seop, head of the Electronic Finance Inspection Bureau at South Korea's Financial Supervisory Service, said at a seminar on Yeouido in Seoul that day that if stablecoins are used as a means of electronic payment, the Electronic Financial Transactions Act will inevitably apply, given fairness with existing electronic payment methods, user protection, and payment settlement stability. He noted that if the same payment settlement transaction is governed by different laws depending on the payment instrument, regulatory arbitrage and confusion could arise, and argued for introducing a small-scale license under the Act for stablecoin payment settlement businesses, along with obligations covering stability safeguards, terms and conditions drafting and reporting, protection of top-up funds and settlement funds, transaction information protection, and dispute resolution. He also said he fully agrees with imposing anti-money laundering obligations separately on issuers, wallet providers, and payment service providers.

Kim Bo-il, head of the virtual asset team at the Bank of Korea, reiterated that stablecoin issuance should first begin with banks at the center, and that eligibility for issuance should be expanded only after it is confirmed that the technology can effectively connect with existing systems and regulation. He described this as a compromise arrangement proposed to mitigate the use of stablecoins as a tool for circumventing regulation in the absence of an optimal solution. He also raised the need to carefully assess the extent to which South Korea's national payment system relies on global private networks, and how to design linkage and interoperability with existing systems. Yonhap said that in the government bill of the Basic Act on Digital Assets expected to be announced this month, stablecoin issuers are likely to be led by bank-centered consortia.

Hwang Seok-jin, a professor at Dongguk University, suggested that rather than an issuance structure led by a specific industry, it would be more appropriate to allow practitioners that meet certain qualification and responsibility requirements to participate. Lee Dong-chul, chairman of the Credit Finance Association, said he hopes more financial industry players will participate in the won-denominated stablecoin issuance consortium and leverage their respective strengths; Namgung Seol, head of the card business division at Shinhan Card, said overseas stablecoin payment cases usually rely on the Visa network, and if South Korea seeks to promote early circulation in the payments sector, it may also need to use card network infrastructure to some extent. The seminar was hosted by the Democratic Party of Korea's AI Finance and Economy Promotion Team, and participating lawmakers expect the government bill to be introduced this month.