South Korea and Japan Enter the Stablecoin Race

Regulators in South Korea and Japan are actively creating conditions for the “stablecoin” market. According to local media, the former is preparing a new bill, while the latter is close to approving its first yen-pegged token.

These moves are likely a response to actions by the United States. In July, President Donald Trump signed the GENIUS Act, establishing a federal regulatory framework for stablecoins to strengthen the global position of the dollar.

South Korea

South Korea’s Financial Services Commission will present a document regulating “stablecoins” in October, according to ruling party representative Park Min Kyu. The initiative will set requirements for issuance, collateral management, and internal risk control systems.

Additionally, the country’s largest banks — KB Kookmin, Woori, Shinhan, and Hana — are considering meeting with USDC issuer Circle’s president Heath Tarbert, who will visit South Korea next week.

Meanwhile, the central bank advocates for stricter regulation of the sector. The regulator has tasked the Digital Currency Group to focus on stablecoins pegged to the Korean won to prevent capital outflow and reduce reliance on the dominant USDT and USDC in the segment.

Japan

The Financial Services Agency of the neighboring country (FSA) will approve the issuance of the first yen-pegged stablecoin this autumn. This refers to JPYC from the Tokyo-based fintech company of the same name. The firm plans to register with the FSA as a money transfer operator in August. Token sales will launch a week after registration.

JPYC will be backed by highly liquid assets, including deposits and government bonds. Potential uses include international transfers, corporate payments, and the DeFi sector.

Over three years, JPYC plans to issue stablecoins worth 1 trillion yen ($6.78 billion). According to Nikkei, several hedge funds have shown interest in the project.

A legislative framework already exists in Japan. In 2022, the parliament recognized stablecoins as “electronic payment instruments.” Their issuance is permitted only to licensed banks, service providers, and trust companies.

Stablecoins and Crypto-Fiat Services

Juan Lopez, a partner at VanEck Ventures, told Decrypt that “stablecoins” enhance the value of payment services. Companies that bridge digital assets and traditional systems are becoming prime targets for mergers and acquisitions.

According to him, such platforms previously helped clients purchase cryptocurrency. Now they are becoming full-fledged payment providers for everyday operations with stablecoins, such as money transfers and business payments.

Amid the stablecoin boom, the Hong Kong Securities and Futures Commission warned of increasing fraud risks following the introduction of new regulations in the segment. The regulator urged investors to exercise caution, pointing to speculation around companies merely announcing plans to obtain a license.

In February, journalists reported that the FSA would review cryptocurrency legislation, including the possibility of classifying digital assets as financial products “on par with securities.”

In August, tax authorities in Jeju City, South Korea, initiated the process of seizing and confiscating cryptocurrencies from tax evaders.