Bank of Korea Plans Amendment to Foreign Exchange Act to Regulate Stablecoins

The Bank of Korea plans to prepare an amendment to the Foreign Exchange Transactions Act by the end of 2023 to regulate stablecoins as a means of payment, according to a report dated October 22.

The central bank, in collaboration with the government, is working on measures aimed at regulating transactions with virtual assets. The amendment is currently not a bill, and there is no draft text or set date for its consideration. It is assumed that the changes in the law will aim to include dollar stablecoins in the same category under control as transfers to New York.

The bank also pointed out the need for controls to limit transactions that facilitate illegal activities, such as compliance with money mixing requirements and protection against regulatory gaps related to personal wallets.

The planned introduction of a cryptocurrency tax is set to take effect on January 1, 2027, but lawmakers question the advisability of this step before a law defining what cryptocurrency is has been passed. Additionally, the National Tax Service will complete draft tax notifications by October 30, laying the groundwork for the implementation of new rules. However, until the local adoption of the tax law and the tax implications for the cryptocurrency industry, there remain a number of open questions that require careful analysis.

The Chairman of the Financial Services Commission, Lee Eon Won, noted that the tax should "require comprehensive consideration of various circumstances," emphasizing the importance of a detailed approach to taxing the new asset. There are also two petitions—one to repeal the tax and another to postpone it for two years—each of which has gathered more than 50,000 signatures, necessitating legislative review.