Ruling Party Accelerates Legislation of Won-Based Coin, But Concerns About Bubble

[Financial News] The Democratic Party of Korea is speeding up the legislation of a won-based stablecoin, a presidential campaign pledge of President Lee Jae-myung, aiming to complete it within this year. However, there are concerns within the party that a bubble could form in the coin market, potentially causing market disruption.
Min Byung-deok, who led the digital asset pledge during the presidential election period, emphasized at the 'Economy is Democratic Party' seminar held on the 22nd that the won stablecoin should be legislated within this year.
Min mentioned the situation where the U.S. has implemented the 'Genius Act' to legislate asset-linked digital assets, noting that "the U.S. will certainly pressure the use of dollar stablecoins in foreign exchange transactions," and stressed that "our country must take the lead in the stablecoin domain. It will definitely be legislated within this year."
The Democratic Party is promoting the institutionalization of the won stablecoin based on the Digital Asset Basic Act proposed by Min. When private companies issue won stablecoins, the Financial Services Commission will set entry barriers by examining capital and refund reserves, but the industry will be left to self-regulate in subsequent transactions.
Min emphasized, "We must move away from the negative perception of digital assets," adding that "although we may not beat the dollar stablecoin as a payment method, we can still capture a portion of the market, which is the last golden opportunity."
He also suggested ways to quickly increase the usage of won stablecoins after they are incorporated into the system. For example, using won stablecoins to purchase tickets for events such as performances by globally popular cultural artists, or pre-installing a won stablecoin app on Samsung Electronics smartphones used worldwide. Additionally, he proposed that Korean companies should use won stablecoins for international payments.
However, lawmakers Choi Min-hee and former lawmaker Kim Yong-nam raised concerns about the potential for asset prices to rise abnormally, citing the collapse of the derivatives bubble that triggered the 2009 financial crisis. In response, Min acknowledged the concerns about asset bubbles but dismissed them, stating, "It's not about issuing currency with seigniorage but converting it to coins," indicating there is no problem.
Min's argument is that the stability of the won stablecoin must be guaranteed, and it is known that lawmaker Ahn Do-geol is preparing supplementary legislation related to this. The regulation requires the issuer to deposit more than 100% of the issuance amount in won as collateral assets.

uknow@fnnews.com Kim Yun-ho Kim Hyung-gu Reporter