South Korea Tells Stablecoins: 'You're Real Money Now — And No Yield for You'

South Korea's ruling Democratic Party is cooking up a fresh draft bill that could shake up the stablecoin game. The proposal would classify stablecoins as foreign exchange payment instruments, bringing them under the watchful eye of the Foreign Exchange Transactions Act — no separate registration required for related businesses. Basically, the government just sent an invitation to the regulatory party, and stablecoins definitely weren't on the guest list.

Cross-border stablecoin transactions would be treated as "means of payment" under the existing FX rules, though certain payments for goods and services might get a pass from reporting requirements within a defined scope. So your grandma buying kimchi online with USDC? Probably fine. Moving millions to dodge taxes? Seoul's got eyes on you.

But here's the kicker: the draft wants to ban issuers from paying any interest on stablecoins — call it what you want, but if it's incentive-like, it's out. That's right, degens. No more "yield" wrapper tricks. You thought you were getting passive income? Turns out you were just getting a lecture in monetary policy.

On the RWA front, tokenized real-world assets would need their underlying assets parked in managed trusts under the Capital Markets Act. The Financial Services Commission would also be on the hook to set technical standards for interoperability across digital asset networks. In other words, your fractionalized real estate token better have its paperwork in order, or it's straight to financial jail.

Some notable gaps: exchange ownership limits and bank-related requirements for stablecoin issuers didn't make the cut in this draft version. Because nothing says "comprehensive regulation" like leaving out the parts where people actually lose money.

The move tracks with earlier warnings from Bank of Korea Governor Lee Chang-yong, who back in January flagged that won-denominated stablecoins could muddy capital-flow management and FX stability. Lee was out here playing Cassandra while everyone else was busy calculating APY.

Cointelegraph couldn't independently confirm these draft provisions through a public National Assembly filing as of Wednesday. So yeah, take this with a grain of salt, or maybe a whole salt mine.