South Korea is preparing a ban on stablecoin interest payments.
Date: 2025-10-21 Author: Oliver Abernathy Categories: IN WORLD
The Financial Services Commission of South Korea (FSC) plans to submit a bill to parliament by the end of the year that would ban interest payments to stablecoin holders. This initiative aims to clearly distinguish between the use of digital currencies for payments and bank deposits.
According to the agency, the proposed measures largely mirror the American GENIUS Act, which previously imposed a similar ban on stablecoin issuers in the US. According to GENIUS, cryptocurrency companies cannot pay rewards to token holders to avoid creating competition with bank deposits. However, American banks have criticized this law, believing it leaves loopholes for crypto exchanges and could lead to an outflow of funds from the traditional banking sector.
FSC representative Lee Yeog-won noted that the right to issue stablecoins should belong exclusively to banks, with fintech companies allowed to participate only as technical partners. Furthermore, the agency intends to prohibit crypto exchanges from independently issuing stablecoins in the country. However, the bill allows for the use of these tokens for domestic and international payments, as well as money transfers.
FSC Vice Chairman Kwon Dae-young proposed introducing a minimum capital requirement for stablecoin issuers of 5 billion won (approximately $3.52 million). The regulator is also considering requiring issuers to hold more than 100% of their reserves in liquid assets, including government bonds.
The planned regulations include mandatory licensing for companies issuing stablecoins, strict oversight of reserve management, ensuring users' rights to redeem assets, and compliance with international regulatory standards.
It is also noted that the FSC has already taken steps to strengthen oversight of the cryptocurrency market. In September, the commission capped interest rates on crypto loans, now preventing them from exceeding 20%. According to the regulator, these measures are aimed at protecting investors from abuse and fraud in the digital asset sector.
Thus, South Korea is gradually building a comprehensive regulatory system that should balance the interests of banks, fintech companies, and users, and reduce risks in the stablecoin market.
