South Korea’s opposition chief, Lee Jae-myung, proposed launching a won-backed stablecoin on Might 20 to stem the 56.8 trillion gained ($40.8 billion) crypto outflow and cut back dependence on international stablecoins like USDT and USDC.
The Democratic Occasion presidential candidate’s broader digital asset technique additionally consists of legalizing spot crypto ETFs and permitting institutional crypto investments below authorities oversight, indicating a shift in nationwide coverage.
Lee Jae-myung has not too long ago made public appearances, together with a coverage speech final week with economics-oriented YouTubers, selling stablecoins as a method to protect nationwide wealth and modernize the monetary system.
Democratic Occasion Presidential Candidate Pushes for Received-Backed Stablecoin to Curb Capital Flight
In his speech, Lee addressed South Korea’s crypto sector’s large capital outflow drawback. Between January and March 2025, South Korean exchanges recorded 56.8 trillion gained (roughly $40.8 billion) in crypto asset outflows.
Almost half of those actions have been tied to U.S. dollar-based stablecoins like USDT and USDC, the one ones at the moment allowed for home buying and selling.
Lee emphasised that establishing a won-backed stablecoin market is vital to stopping nationwide wealth from leaking abroad and preserving South Korea’s monetary sovereignty.
He reportedly said, “Stopping capital flight falls inside nationwide financial safety. A won-based stablecoin will help protect home monetary worth and decrease our dependability on foreign exchange.”
The proposal is a part of his broader digital asset technique, which additionally consists of legalizing spot cryptocurrency exchange-traded funds (ETFs) and permitting institutional investments, such because the Nationwide Pension Fund, to be supervised by the federal government as soon as value stability standards are met.
Political Campaigns in South Korea Supply Crypto Perks, Goal Bitcoin ETF Entry
Political campaigns in South Korea are leveraging the nation’s outstanding crypto market to draw voters forward of the parliamentary election.#CryptoNews #SouthKoreahttps://t.co/Ly8Rz7kwcL— Cryptonews.com (@cryptonews) April 8, 2024
At present, South Korean legislation prohibits the issuance of home stablecoins, forcing exchanges to depend on U.S. dollar-based stablecoins.
South Korean regulators have lengthy been cautious of domestically issued stablecoins, partly because of the collapse of TerraUSD in 2022, a South Korean-linked venture that triggered international scrutiny of algorithmic stablecoins.
The LUNA token and TerraUSD don’t qualify as a regulated safety, in response to South Korea’s Supreme Court docket.#Tokens #SouthKoreahttps://t.co/3jmIvnPeRt
— Cryptonews.com (@cryptonews) February 19, 2025
Nevertheless, Lee’s plan envisions a regulated, won-backed stablecoin with strict reserve necessities. Issuers would wish approval from the Monetary Providers Fee and preserve reserves of at the very least 50 billion gained, as proposed within the upcoming Digital Asset Fundamental Act.
Whereas the proposal has gained help amongst youthful voters and crypto fans, economists and regulatory consultants have expressed issues.
Shin Bo-sung of the Korea Capital Market Institute warned that stablecoins may inflate the cash provide and shift financial management to non-public issuers, stating, “Stablecoins are basically one other type of banking, creating cash out of nothing.”
Whereas Lee’s plan requires fiat-backed variations with strict reserve guidelines, critics warn that operational dangers, together with redemption failures and liquidity mismatches, stay related.
Crypto Turns into Key Situation in South Korea’s Presidential Election
Political help for extra basic crypto reforms and stablecoin distribution is taking heart stage within the upcoming presidential election. With greater than 15 million crypto fans in South Korea, lots of whom are younger and tech-savvy, the subject has change into a focus within the 2025 presidential contest.
South Korea’s Democratic Occasion launches a Digital Asset Committee, aiming to place crypto regulation below the subsequent president’s management.#southkorea #regulationhttps://t.co/p8xJDmqFoZ
— Cryptonews.com (@cryptonews) Might 13, 2025
Lee’s advocacy of a home stablecoin matches properly with a bigger reform agenda. Along with Lee’s proposal, the Democratic Occasion launched a Digital Asset Committee on Might 13, 2025, on the Nationwide Meeting Members’ Corridor in Seoul. The committee’s mandate is to develop cryptocurrency insurance policies, promote trade development, and deal with regulatory uncertainty, particularly regarding stablecoins.
Additionally this week, the Democratic Occasion will doubtless current the Digital Asset Fundamental Act, a legislative initiative to create a authorized foundation for cryptocurrencies and different applied sciences in Korea.
The proposed legislation will make clear the authorized standing of digital property and set tips on issuance, circulation, and itemizing. It’s going to additionally embody strict necessities for stablecoin issuers.
Companies wishing to create won-backed stablecoins should maintain at the very least 50 billion gained in reserves and get clearance from the Monetary Providers Fee (FSC).
As well as, the act is predicted to incorporate infrastructure necessities for digital asset service suppliers and investor safety insurance policies.
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