The Bank of Korea intends to draft an update to the Foreign Exchange Transactions Act alongside the administration prior to the conclusion of the year, which would classify stablecoins as a payment instrument, based on a written document submitted for the National Assembly’s yearly audit and reported by the Korean publication Digital Asset.
The October 22 report from the central bank, serving as a follow-up to the audit from last year, states that discussions are underway with the government regarding strategies to oversee cross-border digital asset transfers.
While developing a surveillance mechanism grounded in foreign exchange network reporting, the institution noted that it plans to formulate the legislative change alongside the administration during the current year to govern stablecoins as a payment method, among additional objectives.
This initiative represents a proposal to draft legislation rather than a finished bill itself. There is currently no legislative text, no specific token identified, and no enactment date. Furthermore, “means of payment” carries a strict legal definition under South Korean foreign exchange regulations: an asset whose international transfer requires mandatory reporting.
Interpreted this way, the proposed amendment would subject dollar-pegged stablecoins to the identical restrictions applied to a wire transfer destined for New York, rather than establishing them as legal tender at a convenience store in Seoul.
The Bank of Korea highlighted off-bank settlements, mixing services, and oversight gaps concerning personal wallets as elements that facilitate illicit transactions. Individuals holding bitcoin via self-custody within South Korea ought to take notice: the nation’s stringent capital controls are the foundational reason why the kimchi premium exists, and reinforcing the foreign exchange net around digital assets will solidify those controls rather than alleviate them.
This foreign exchange initiative progresses concurrently with the Digital Asset Basic Act, which serves as the licensing and stablecoin issuance framework highlighted alongside the potential spot bitcoin ETF approval within the government’s 2026 growth blueprint.
Financial Services Commission Chairman Lee Eog-weon informed legislators on Thursday that consultations have reached their final phases and the legislation will be introduced promptly, as reported by Bloomingbit.
The central bank stated it will collaborate with various ministries to restrict transactions that take advantage of this regulatory loophole until the new statute is enacted.
South Korea’s crypto tax discussions
This regulatory loophole has a firm deadline attached. South Korea’s cryptocurrency earnings tax is scheduled to go into force on January 1, 2027, according to The Block, following three previous delays, prompting lawmakers to question the logic of taxing a market prior to the passage of legislation that formally defines it.
Lee stated on Thursday that the taxation framework should “take various circumstances into full consideration,” as cited by Yonhap. Democratic Party leader Kim Min-seok appealed on Thursday for a “thorough final review,” marking a pivot for a political faction that had previously pushed hard for the 2027 implementation.
Two separate petitions—one advocating for the repeal of the tax and another requesting a two-year postponement—have both successfully gathered over 50,000 signatures, thereby mandating a formal legislative review.
Meanwhile, the National Tax Service has maintained its schedule, intending to finalize its draft tax guidelines by October 30, according to reports by Digital Asset.
Originally published at https://bitcoinmagazine.com/news/bank-of-korea-crypto-bill-and-tax.
