FSC Delays Won-Stablecoin Rules Amid Inter-Agency Disputes

South Korea delays won-stablecoin legislation as FSC and central bank clash over control, issuer rules, and broader digital asset regulation plans.

South Korea’s financial regulators have delayed key rules for won-backed stablecoins. The delay was after missed deadlines from the government and unresolved inter-agency disagreements. And consequently, there is now a shroud of uncertainty over the country’s digital currency framework. Moreover, disagreements with the central bank are still influencing the regulatory debate.

FSC Misses Deadline as Coordination Issues Persist

The Financial Services Commission did not get its proposal submitted by December 10. The National assembly’s political affairs committee had requested submission by that date. The FSC however cited lack of time for coordination. Officials affirmed that more discussions are still required.

An FSC official admitted missing the deadline. The official said there needed to be more alignment with relevant agencies. Therefore, submission within the time requested proved difficult. The gist of this explanation stressed coordination between procedures rather than the abandonment of policies.

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Meanwhile, a separate public announcement is planned by the FSC. Authorities plan to publish the proposal together with the parliamentary submission. Transparency, officials said, requires a briefing from outside. This method is supposed to protect the public’s right to information.

Financial authorities are projecting a near future. The integrated digital asset bill is on the books for January introduction. Therefore, the government proposal can come early next month. Timing is based on ongoing consultations, officials said.

Currently, disputes with the Bank of Korea are the focus of talks. The central bank would like to get more control over the issuing of stablecoins. In particular, it requires intensive bank involvement. This position has become the core of the obstacle.

Bank consortia, of which the Bank of Korea insists on having a majority ownership in them, insisting that under its proposal, at least 51 percent ownership is required. The philosophy revolves around that of currency stability. Officials believe stablecoins act in the same way as money.

Accordingly, the central bank desires effective bank management pro-actively. It believes banks are the ones that ensure financial system safety. Further, the BOK wants veto power on the approval of issuances. It also wants inspectorate power.

Stablecoin Control Debate Shapes Broader Digital Asset Rules

The FSC is highly opposed to bank-led issuance standards. Officials point to the absence of precedents in the world. They say innovation would suffer as a result of restrictive ownership rules. Therefore, they prefer more flexible ($) issuer structures.

Regulators use international examples. Under the EU’s MiCA framework, majority of issuers are digital institutions. Fourteen out of fifteen approved issuers are non-banks. Similarly, the first issuer of yen stablecoins in Japan was a fintech company.

The FSC also rejects demands from inspectorate authorities. It contends that FSC approval should be enough. Additional oversight powers seem excessive, officials say. However, compromise options are still being discussed.

One of the compromises may be partial stake of banks. Issuer ownership might be different depending on the business model. This way, it is possible to have a balance between being stable and innovative. Negotiations are still ongoing, according to officials.

Regulatory Delays Highlight Institutional Tensions Over Stablecoins

Beyond stablecoins, the plan includes digital assets in general. Proposed rules incorporate licence requirements. Business conduct standards are also provided. Capital adequacy and soundness measures are prominently included.

In addition, listing and disclosure requirements are scheduled. Supervisory powers and sanctions are provided. These measures are aimed at enhancing market integrity. Officials say the package is comprehensive.

Another authority said analysis of expert opinions is under review. There is continued feedback from industry and academics. Preparation efforts are increasing, it is said. However, final alignment is an open problem.

The delay indicates institutional tension for control of money. Stablecoins throw traditional policy frameworks out the window. As a result, there is still no regulatory clarity. Market players remain waiting for clear directions.

Ultimately, the FSC comes under pressure to provide clarity. In the meantime, controversies highlight competing regulatory interests. The coming weeks will be the decisive ones. Stakeholders anticipate movement before it is introduced for legislation.