South Korea to Amend Foreign Exchange Act for Stablecoin Regulation

The Bank of Korea (BOK) and the South Korean government have announced plans to revise the Foreign Exchange Transactions Act to establish a comprehensive regulatory framework for stablecoins. This legislative initiative, confirmed on October 23, 2026, aims to formalize the use of digital assets as a legitimate means of payment while ensuring financial stability. The move follows a formal request from the National Assembly to modernize the nation's payment infrastructure and mitigate risks associated with cross-border digital asset movements.

Strengthening Oversight of Cross-Border Transactions

A primary focus of the proposed legal amendments is the regulation of cross-border transactions involving virtual assets. In a business status report submitted during a National Assembly audit, the central bank detailed its ongoing consultations with government agencies to define the legal status of stablecoins when used for international settlements. This measure is intended to prevent illicit capital outflows and ensure that digital dollar-pegged assets or other stablecoins operate within the transparency standards of the traditional financial system.

To support these regulatory goals, the Bank of Korea is currently developing a specialized virtual asset monitoring system. This infrastructure will include:

• Integration of digital asset data into the existing foreign exchange data network.
• Mandatory reporting requirements for entities facilitating stablecoin-based payments.
• Enhanced tracking mechanisms for large-scale transfers across the blockchain to identify suspicious activity.
• Specific guidelines for the issuance and distribution of stablecoins acting as "related instruments" to fiat currency.

Response to Global Financial Standards

The BOK’s decision to expedite these amendments reflects a broader trend among major economies to integrate Web3 technologies with established monetary policy. Last year, the National Assembly urged the central bank to globalize the local payment infrastructure to keep pace with international digital asset trends. By amending the Foreign Exchange Transactions Act before the end of this year, South Korea seeks to provide legal clarity for businesses and consumers using stablecoins like USDT, USDC, or locally developed digital currencies.

The Bank of Korea is preparing to establish a virtual asset monitoring system and plans to work with the government to draft amendments to the Foreign Exchange Transactions Act this year to regulate stablecoins as a means of payment.

In conclusion, the upcoming legislative changes signify South Korea's transition toward a more structured digital economy. By incorporating stablecoins into the Foreign Exchange Transactions Act, the BOK aims to balance the efficiency of blockchain-based payments with the necessity of robust financial oversight. These developments are expected to provide a foundation for future innovations in the South Korean fintech sector while maintaining the integrity of the national won.