Bank of Korea plans forex law amendment to regulate stablecoin payments

The Bank of Korea plans to prepare an amendment to the Foreign Exchange Transactions Act with the government before year-end to regulate stablecoins as a means of payment. Digital Asset reported the plan from the central bank's written submission to the National Assembly's annual audit. The central bank's October 22 report follows up on last year's audit. The report says the central bank is consulting the government about regulating virtual-asset transactions across borders. The bank said the work includes developing a monitoring system using reports from the foreign exchange network.

The initiative remains a plan to prepare legislation, rather than a bill already drafted. The proposal has no draft text, specified token or date for passage. South Korea's forex law defines a means of payment as an instrument subject to reporting requirements when moved across borders. Under that interpretation, the amendment would subject dollar stablecoins to controls comparable to those governing a wire transfer to New York. However, the amendment would not give stablecoins legal-tender status for purchases in Seoul.

The Bank of Korea identified settlement beyond the banking system, mixers and gaps in personal-wallet regulation as factors facilitating illegal transactions. South Korea's capital controls account for the kimchi premium. Tighter forex oversight of crypto would reinforce those controls rather than relax them, including for bitcoin holders who use self-custody in South Korea.

The forex initiative is proceeding alongside the Digital Asset Basic Act, a framework for licensing and stablecoin issuance. The government's 2026 growth strategy identified that framework alongside approval of spot bitcoin exchange-traded funds. Bloomingbit reported that Financial Services Commission chairman Lee Eog-weon told lawmakers Thursday that consultations are nearing completion and the bill will follow as soon as possible. The Bank of Korea said the bank will cooperate with ministries to restrict transactions exploiting the regulatory gap until the law is in place.

The Block reported that South Korea's crypto income tax is scheduled to start on January 1, 2027, following three postponements. Lawmakers have questioned imposing taxes before legislation defining the market has passed. Yonhap reported that Lee said Thursday the tax should "take various circumstances into full consideration." Democratic Party leader Kim Min-seok requested a "thorough final review" Thursday. Kim's request marks a change from the party's insistence on implementation in 2027.

A petition seeking repeal and another seeking a two-year delay each surpassed the 50,000 signatures required to trigger legislative review. Digital Asset reported that the National Tax Service still plans to complete the agency's draft tax notice by October 30.