US Tariff Deal Clears Way For Korea's Stablecoin Dream

Latest stories

Azerbaijan-Uzbekistan deal forges new Central Asia energy axis China's arrests of boys' love authors hardly a gay erotica ban Trump burning a diplomatic bridge to Malaysia

DPK member Ahn Do-gil introduced the Act on the Issuance and Distribution of Value-Stable Digital Assets, while the PPP's Kim Eun-hye proposed the Act on Payment Innovation Using Value-Fixed Digital Assets.

Lee's push marks his first real economic pivot from the disgraced Yoon Suk Yeol administration. In early April, the courts removed Yoon from office . This was five months after his reckless martial law declaration in December, for which PPP member Yoon was impeached.

When Lee's DPK won election in June, the immediate goal was to make up for lost time to stabilize Asia's fourth-biggest economy. Several months of political wrangling over Yoon's fate were a lost period for moves to raise Korea's competitive game.

In the interim, the economy shrank in the first quarter as the Kospi stock market gyrated. That left the Bank of Korea largely in the driver's seat. Yet Lee's stablecoin focus suggests his administration has hit the ground running.

Typically, Korean regulators are among the most cautious in Asia. All of which makes the Lee administration's stablecoin gambit all the more unexpected.

As DPK lawmaker Min Byung-deok, a member of the National Assembly's Political Affairs Committee, puts it, legislation now under consideration would allow non-financial companies to issue won-denominated stablecoins - and to do so beyond the Bank of Korea. The catch is that digital assets would operate under a clear legal framework.

Another catch: the BOK may still require some convincing. It worries Lee's stablecoin vision will increase capital outflow risks .

Among legislators, provisions would also facilitate security token offerings (STOs) and pave the way for the creation of, and transacting in, spot market exchange-traded funds (ETFs) backed by virtual assets.

“The STO bill will first go through the standing committee next month,” Min says. Min adds that the presidential office's chief policy aide, Kim Yong-beom, a blockchain expert, is“largely supportive of the bills.”

Korea isn't setting the stage for a crypto free-for-all. It plans to tweak strict foreign currency transaction laws accordingly and strengthen oversight in the crypto market by the BOK and the Ministry of Economy and Finance.

The BOK must be empowered to play its role in maintaining financial stability,” says DPK member Ahn.“If stablecoins are used abroad, they become a form of foreign exchange. That means the finance ministry needs a legal foundation to exercise its authority.”

Ahn says the process will also be coordinated by the Financial Services Commission. President Lee's team has ordered up a task force on stablecoin implementation.

Lee's timing with these crypto reforms could be particularly favorable, as Korea Exchange is exploring digital ETFs, hoping to allow institutions to begin trading them as early as the third quarter.

Korea also joins Hong Kong in enjoying something of a first-mover advantage in one of the hottest areas of global finance, one still arguably in the frontier stages.

According to Paul Chan, Hong Kong's financial security, the global market value of stablecoins is estimated at about $240 billion, with trading volume topping $20 trillion in 2024.

In Korea's case, voters gravitated to Lee's crypto-friendly platform. As of the end of 2024, Koreans held some $74.5 billion worth of digital assets.

On the campaign trail, Lee pledges to legalize and nurture digital ETFs, promote the widespread adoption of Korean won-backed stablecoins, streamline regulations to prevent capital flight and even allow the massive $884 billion National Pension Service to invest in digital assets.

Yet Lee must multitask in a hurry. Lee inherited an economy under pressure from global tariffs. Despite the US tariff deal, Trump has yet to reach a deal with China.

Even as Seoul takes a breather after notching tis tariff deal, it must brace for the shock waves if China refuses to grant Trump the“grand bargain” deal he seeks. That could see Trump turning his tariff policies up to 11, slamming Korea's open, trade-reliant economy.

Over the last six months, BOK Governor Rhee Chang-yong's rate cuts have been the glue holding a fragile economy together. Yet as the BOK cuts rates, it's been limited by domestic constraints. Further rate cuts might encourage households to up borrowing activity.