South Korea Plans Forex Law Change to Cover Stablecoins

South Korea stablecoin regulation could expand beyond the proposed Digital Asset Basic Act, as the government and the Bank of Korea plan to amend the Foreign Exchange Transactions Act to regulate stablecoins used for payments and strengthen oversight of cross-border digital-asset transactions.

The government and the Bank of Korea (BOK) intend to prepare the amendment this year, according to a report submitted by the central bank during an October 22 parliamentary audit and reported by local outlet Digital Asset.

The proposal would address the use of stablecoins for payments, while the central bank is also developing a monitoring framework for digital-asset transactions, including cross-border transfers. The amendment remains under preparation and has not yet become law.

Cross-Border Transfers Under Greater Scrutiny

The BOK said it is coordinating with the government on measures to monitor cross-border digital-asset transactions and strengthen international cooperation against illegal activity.

The central bank has raised concerns that crypto transactions can move across borders outside traditional financial institutions. It also pointed to mixers and unhosted wallets as tools that can increase transaction anonymity and complicate efforts to detect illicit activity.

The planned monitoring framework would complement the proposed legislative changes by strengthening oversight of digital-asset flows and addressing potential gaps in the existing foreign-exchange framework.

Broader Digital-Asset Legislation Also in Development

The proposed foreign-exchange amendment is progressing alongside South Korea's planned Digital Asset Basic Act, which is intended to establish a broader framework for the crypto sector, including rules for stablecoin issuance and licensing requirements for exchanges.

Financial Services Commission Chairman Lee Eog-weon said during a parliamentary hearing on October 22 that discussions on the legislation were nearing completion and that the government would work to introduce it as soon as possible.

The BOK said it would continue coordinating with relevant government ministries to reduce regulatory gaps while the broader legislation is being developed.

The two initiatives address different aspects of digital-asset activity: the planned foreign-exchange amendment focuses on stablecoins used for payments and cross-border oversight, while the Digital Asset Basic Act is intended to establish a wider framework for the industry.

Stablecoins Move Further Into Payment Regulation

South Korea's proposal reflects a growing regulatory focus on stablecoins as instruments for moving money, rather than treating them solely as crypto assets traded on exchanges.

For payment providers and stablecoin issuers, the eventual rules could affect how payment-related activity and cross-border transfers are monitored. However, the precise obligations will depend on the legislation's final wording and implementing rules.

The government has not yet finalised the proposed amendment, leaving the scope and timing of the new stablecoin payment requirements subject to further legislative development.