South Korea’s won-backed stablecoin is coming?

South Korea’s presidential candidate, Lee Jae-myung, steps up and says, hey, we gotta make our own stablecoin, one tied to the Korean won.

Why? To stop the country’s money from sneaking out the back door and keep control right here at home. Sounds smart, right? But, as always, there’s more to the story.

Capital control?

Lee, the leader of the Democratic Party, laid out his plan during a policy chat.

He’s pushing for a stablecoin pegged to the won, wanting to keep South Korean wealth inside the country and cut down on the reliance on foreign stablecoins like USDT and USDC.

Right now, South Korean law says no to domestic stablecoins, so local crypto exchanges have to settle for dollar-based ones.

That’s like having to borrow your neighbor’s car ‘cause you can’t buy your own.

Here’s a number that’ll make you blink, because from January to March this year, crypto exchanges in South Korea saw 56.8 trillion won, about $40.8 billion flow out.

Almost half of that was tied to foreign stablecoins. Lee’s point?

“We need a won-backed stablecoin to stop our national wealth from leaking overseas.”

Different but the same

But Lee’s crypto ambitions don’t stop there. He’s also all in on legalizing spot crypto ETFs that let regular people and big players like the National Pension Fund invest in cryptocurrencies once the prices calm down.

To make this happen, he wants a slick monitoring system and lower transaction fees, making crypto easier to handle but still under government watchful eyes.

Now, not everyone’s popping champagne over this. Economists like Shin Bo-sung from the Korea Capital Market Institute are raising eyebrows.

He warns that stablecoins might blow up the money supply and hand over monetary control to private companies.

Crypto laws

On May 13, the Democratic Party launched a Digital Asset Committee to hash out crypto policies and boost the industry.

This committee joins a growing list of groups in South Korea focused on crypto regulation, including the Virtual Asset Committee from 2024 and a public-private task force started in 2022 by the Financial Services Commission.

The Democratic Party also plans to introduce the Digital Asset Basic Act.

This bill would lay down the law for cryptocurrencies and stablecoins, demanding issuers keep at least 50 billion won in reserves and get the Financial Services Commission’s stamp of approval.

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