According to a report by Bloomberg, the Democratic Party of South Korean President Lee Jae-myung has introduced a bill to the parliament, which would allow eligible companies to issue stablecoins. The proposed Digital Asset Basic Act aims to enhance transparency and promote competition within the cryptocurrency sector.
To be eligible, companies must have a minimum of 500 million won ($368,000) in equity capital and maintain reserve funds to guarantee refunds, in addition to obtaining approval from the Financial Services Commission. During his election campaign, President Lee made several promises to support South Korea's cryptocurrency industry, which has approximately 15 million investors. One of his promises was to support a stablecoin market based on the Korean won, in order to prevent the outflow of national wealth. Stablecoins are digital assets pegged to traditional financial assets, such as fiat currencies, with the US dollar being the most widely used.
They offer a stable alternative to the volatility of cryptocurrencies like bitcoin and ether, allowing users to hold digital assets without worrying about significant price fluctuations. The stablecoin sector, currently dominated by Tether's USDT, has experienced significant growth this year, partly due to regulatory progress in the US. The strength of the stablecoin sector was recently highlighted by the impressive performance of Circle's stock, the issuer of USDC, following its initial public offering.
The market capitalization of the sector has also reached $250 billion for the first time.