South Korean lawmakers have taken a significant step toward regulating stablecoins, with the National Assembly’s Political Affairs Committee convening to review three different legislative proposals. The bills, introduced by the country’s two main political parties, highlight a growing consensus on the need for oversight while revealing key differences in approach.

Rival Proposals Take Center Stage

The committee, a crucial gatekeeper for financial legislation in South Korea, is considering two bills from the ruling Democratic Party of Korea (DPK) and one from the opposition People Power Party (PPP). The DPK’s proposals were put forward by lawmakers Kim Hyun-jung and Ahn Do-geol, while the PPP’s alternative vision was introduced by Kim Eun-hye.

All three bills aim to establish a clear framework for stablecoin issuance and distribution. The proposals share common ground on several foundational aspects, suggesting a bipartisan agreement on basic safeguards. Both parties support mandating strict reserve requirements and requiring stablecoin issuers to be licensed and regulated by the Financial Services Commission (FSC).

Points of Contention and Common Ground

A key area of agreement is the proposed minimum capital requirement, with both sides settling on 5 billion won for any entity looking to issue stablecoins. This measure is designed to ensure that only well-capitalized firms can operate in the market, providing a layer of financial stability.

However, a major point of disagreement has emerged over the permissibility of interest payments. The DPK’s bills propose an outright ban on interest-bearing stablecoins, a stance similar to some legislative efforts in the United States. In contrast, the PPP’s proposal contains no such restriction, leaving the door open for stablecoins that offer users a yield. Other differences between the bills relate to the specifics of consumer protections, minimum redemption times, and how stablecoins pegged to currencies other than the Korean won should be treated.