South Korea has come up with a 'Korean formula' for stablecoin regulation.
According to the latest news, the ruling party and the opposition in South Korea have rarely reached an agreement and are preparing to pass the 'Basic Law on Digital Assets' in January next year. The core point of this bill is to design a 'bank-led alliance' model for stablecoins: banks must hold at least 51% of the shares, and tech companies can only participate as minority shareholders.
In simple terms, issuing stablecoins is allowed, but traditional banks must be the major shareholders and have the final say.
Banks benefit, while tech companies get the leftovers. This model effectively hands over the 'minting rights' and core risk control of stablecoins to the traditional financial system, with Web3 companies mainly providing technology and operations. Whether this protects investors or stifles innovation is debatable.
'Safety' outweighs 'innovation'; the mindset of South Korean regulators is clear. After the painful lessons from LUNA, their primary goal is to prevent the next UST and ensure financial stability. Efficiency and new paradigms may have to take a backseat.
As a global regulatory bellwether, South Korea has always been an aggressive market for cryptocurrencies, and its regulatory model is often referenced by other countries. If this 'bank alliance' model is implemented, it might create ripple effects in other countries seeking balance.
The impact on the current landscape may be significant; stablecoins like USDT and USDC, which currently dominate the market and are issued by private companies, might face stricter compliance scrutiny or direct competition in the South Korean market.
In short, South Korea is about to impose 'reins' on its once most fervent crypto market. For those pursuing a decentralized fundamentalism, this is undoubtedly a step backward; but for traditional capital seeking mainstream acceptance and stability, it could be a positive signal. How the market will vote depends on the true nature of next year's bill.
