stablecoin interest payments to be banned under new 2025 law

South Korea’s FSC plans to ban curiosity funds on stablecoins, aiming to guard monetary stability whereas selling innovation in digital property, with a brand new crypto regulation anticipated by the top of 2025.

The proposed ban on stablecoin rates of interest displays US laws

Monetary Providers Fee Cher husband Lee Eok-Won announced the policy on October 20 during a parliamentary audit at the National Assembly Finance Committee, as originally reported by Yonhap News. Under the proposed rules, stablecoin holders will no longer be able to earn yield by simply holding the tokens. The policy aims to maintain financial stability while enabling innovation in digital assets.

This transfer is according to the US GENIUS Act, which prohibits stablecoin issuers from providing curiosity or returns to holders. This laws goals to tell apart fee stablecoins from conventional financial institution deposits and stop potential dangers related to yield-bearing digital property.

Nevertheless, it’s value noting that the GENIUS Act has drawn criticism for permitting crypto exchanges to supply rewards on stablecoins, doubtlessly circumventing the curiosity ban. This loophole has raised issues amongst US banks in regards to the threat of serious deposit outflows, which may destabilize the monetary system.

South Korea’s crypto regulation section 2 might be submitted this 12 months

As well as, Lee mentioned banks ought to lead the issuance of stablecoins, whereas fintech firms act solely as technical companions, to make sure a transparent separation between banking and different monetary providers. Crypto exchanges might be banned from issuing their very own stablecoins.

The FSC plans to submit a “section 2 cryptocurrency regulation” to the Nationwide Meeting earlier than the top of this 12 months. Authorities are revising the framework to supply enough safeguards whereas enabling the stablecoin market to assist funds, remittances and different monetary providers, together with cross-border transactions. The regulation might be accompanied by follow-up laws to make sure speedy and efficient implementation.

You may additionally like: DAOs are redefining the enterprise, and the regulation is not accomplished but | Opinion