South Korea to Classify Stablecoins as Payment Instruments Under Forex Law
South Korea is taking significant steps to regulate stablecoins by amending its Foreign Exchange Transactions Act (FETA). This change will classify stablecoins as recognized means of payment, placing them in the same legal category as government-issued notes and banknotes.
The move comes as lawmakers address concerns over unregulated cross-border transactions, money laundering, and tax evasion linked to dollar-pegged stablecoins, which have gained popularity among South Korean users. The amendments are aimed at closing a loophole that has allowed these tokens to circulate freely, potentially posing foreign exchange risks.
Authorities are fast-tracking the amendments, with the goal of implementing adequate regulatory measures by the end of 2026. This legislative effort began in October 2025, when Rep. Park Sung-hoon proposed the bill to mitigate risks associated with unregulated stablecoin circulation.
As part of the new regulations, virtual asset transfer businesses will be required to register with the Ministry of Economy and Finance, with penalties for non-compliance potentially leading to prison sentences of up to three years. The Bank of Korea has been advocating for tighter controls over dollar stablecoin outflows, emphasizing the need for an overhaul of foreign exchange regulations.
The FETA amendments are part of a broader regulatory framework that includes the upcoming Digital Asset Basic Act, which is currently under consultation and expected to be reviewed by the National Assembly in November 2026. This comprehensive approach aims to establish a licensing regime for stablecoin issuers and clarify capital requirements.
For stablecoin users in South Korea, the immediate impact will likely include increased scrutiny on transfers, as businesses handling these transactions will need to comply with new registration and accountability measures.
Updated 08:01 UTC
New Developments in Stablecoin Initiatives
On October 23, 2026, Bank Negara Malaysia and the Bank of Thailand joined Singapore's BLOOM initiative, which aims to facilitate cross-border payments using stablecoins and tokenized deposits.
BLOOM, which stands for Borderless, Liquid, Open, Online, Multi-currency, is a public-private initiative led by the Monetary Authority of Singapore (MAS). It seeks to establish standard approaches for the cross-border settlement and exchange of tokenized bank liabilities and regulated stablecoins.
The initiative focuses on lowering costs associated with cross-border payments by aligning regulatory frameworks across participating jurisdictions, thereby reducing coordination expenses.
Key participants in BLOOM include stablecoin issuer Circle, Singaporean bank DBS, and payments firm Stripe, with a focus on wholesale transactions, particularly in trade finance and corporate treasury operations.
BLOOM builds on Project Orchid, which began trials in 2021 to explore the practical uses of a digital Singapore dollar and programmable money.
Updated 10:31 UTC
New Developments in Wealth Management for Stablecoin Holders
Raffles Family Office (RFO), based in Singapore and Hong Kong, is targeting ultra-high-net-worth clients who hold significant amounts of stablecoins and digital assets. The firm aims to address the challenges faced by these clients, as traditional banks often struggle to accommodate large stablecoin holdings.
RFO's strategy includes the launch of Revo, a dedicated digital asset platform, which received Type 4 and Type 9 licenses from the Hong Kong Securities and Futures Commission (SFC) in February 2026. This allows RFO to provide management services for digital asset portfolios alongside conventional investments.
Chi-Man Kwan, founder and CEO of RFO, has noted that stablecoins serve as the "missing link" between private wealth and crypto markets, highlighting the growing demand for services catering to clients with substantial digital asset holdings.
In 2025, RFO reported over 50% revenue growth, primarily driven by private equity and enhanced investment capabilities. Additionally, on October 22, 2026, RFO entered into an agreement with the Rwanda Development Board to explore investment opportunities in projects such as the Bugesera airport and tourism.
Updated 10:31 UTC
New Developments in South Korea's Stablecoin Regulation
South Korea is set to amend its foreign exchange law to classify stablecoins as payment tools, marking a significant regulatory shift for digital assets in the country.
This amendment will integrate stablecoins into South Korea’s formal foreign exchange reporting and oversight framework, alongside a new virtual asset monitoring system by the Bank of Korea.
Previously, stablecoins were categorized under a broader virtual-asset framework without specific statutory classification, indicating a move towards a more structured environment for their use in payments and cross-border transactions.
Market reactions suggest that this regulatory change could foster a supportive environment for cryptocurrencies, potentially impacting Bitcoin price expectations.
Key areas to watch include the effects of these regulatory changes on cryptocurrency markets and any further announcements from South Korean authorities that may indicate ongoing support for digital asset integration.
FAQ
What is the purpose of South Korea's amendment to the Foreign Exchange Transactions Act (FETA)?
The amendment aims to classify stablecoins as recognized means of payment, addressing concerns over unregulated transactions, money laundering, and tax evasion linked to these digital currencies.
When did the legislative effort to regulate stablecoins in South Korea begin?
The legislative effort began in October 2025 when Rep. Park Sung-hoon proposed the bill to mitigate risks associated with unregulated stablecoin circulation.
What are the potential penalties for virtual asset transfer businesses that do not comply with the new regulations?
Non-compliance with the new regulations could lead to penalties, including prison sentences of up to three years.
What is the expected timeline for implementing the new regulatory measures for stablecoins in South Korea?
Authorities aim to implement adequate regulatory measures by the end of 2026, following the fast-tracking of the amendments.
How will the new regulations affect stablecoin users in South Korea?
Stablecoin users can expect increased scrutiny on transfers, as businesses handling these transactions will need to comply with new registration and accountability measures.
Comments
Comments are moderated before publish.
No comments yet — be the first.