Trump Administration’s Three Digital Asset Policies Signal Paradigm Shift in Finance
Dollar-Pegged Stablecoins Pose Risks to Exchange Rates and Capital Outflows
South Korea Still at 2017 Policy Level, Facing Legislative Gaps
Experts Urge Swift Regulatory Overhaul to Meet International Standards
As the international financial order is undergoing significant changes due to President Donald Trump's shift in digital asset policy, there are calls for South Korea to respond by overhauling its own regulatory framework.
On May 19, the Korea Economic Research Association held a "Digital Asset Expert Panel Meeting" at the Federation of Korean Industries Hall in Yeouido, Seoul. The association stated that while the domestic introduction of stablecoins pegged to the US dollar should be approached cautiously, considering their impact on exchange rates and monetary policy, regulations related to digital assets should be boldly advanced in line with international standards.
Jung Chul, Chief Research Officer at the Korea Economic Research Association, said, "President Trump's digital asset-centered policy signals a complete overhaul of the existing financial system," adding, "South Korea now stands at a critical crossroads in transitioning to a digital financial system."
President Trump has recently outlined three policy directions: recognizing Bitcoin as a strategic asset, a complete ban on central bank digital currencies, and promoting stablecoins pegged to the US dollar as an international means of settlement.
Lee Seungseok, Senior Research Fellow at the Korea Economic Research Institute, explained, "If dollar-pegged stablecoins are widely used for payments in South Korea, demand for the won could decrease while demand for foreign currency could increase, structurally impacting the exchange rate." He added, "Empirical analysis shows that if an additional 2.4 million stablecoins are issued, the exchange rate could rise by about 10%, and the stock index could plummet."
He also warned, "Because stablecoins have a structure that enables rapid asset movement and decentralized control, they could trigger large-scale capital outflows during crises," highlighting the potential threat to foreign exchange market stability.
Kim Hyobong, attorney at Pacific Law Firm, noted, "The United States is expected to complete its digital asset legislation within this year, and Europe has already implemented related regulations," emphasizing, "South Korea should also expedite its second phase of legislation."
He further pointed out, "Since the emergency measures in 2017, South Korea has seen delays in substantial regulatory reform," adding, "It is necessary to review both the policy prohibiting capital relationships between financial companies and digital asset businesses, and the practice of exchanges signing real-name account contracts with only one bank."
Kang Taesu, Invited Professor at the Korea Advanced Institute of Science and Technology, said, "While dollar-pegged stablecoins offer advantages in payment efficiency, they could increase uncertainty in terms of monetary policy," and emphasized, "The central bank and government should design policies so that central bank digital currencies and stablecoins complement each other."
Namgoong Juhyun, Professor at Sungkyunkwan University, stressed, "Excessive regulation could turn South Korea into a 'digital Galapagos,' isolated from global trends," and called for "an urgent need for a financial regulatory framework that meets international standards while ensuring industrial competitiveness."
About 20 experts in digital assets, financial policy, and industry attended the meeting to discuss risk factors and regulatory directions related to the introduction of stablecoins.
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