The Liberal Democratic Party takes the lead in improving the virtual property system
Japan is running, but Korea is slow
It is said, “Whoever possesses the power to make payments controls the flow of money.” This means that it is important to establish proper payment systems and systems. This is because if payments stop, the economy will eventually stop. ‘Virtual assets’ are at the core of today’s changing payment system.
Recognizing this trend, many virtual asset and big tech companies are rushing into the payment market, and governments around the world are also paying attention to the importance of a new payment system centered on virtual assets. This is because payment can become a national security issue beyond the economy. However, there is one country that has recently shown particularly notable changes in this field. It is our neighbor, Japan.
There is a perception in the public that Japan is a country that prefers ‘analog’ and is somewhat behind new technology industries. However, the recent rapid development of Japan's legal system related to virtual assets is so surprising that it dispels this common belief. Movement to legislate exchanges, stablecoins, financial investment products, and DAOs (decentralized autonomous organizations) through the implementation of a comprehensive plan based on the Web 3.0 white paper led by the Liberal Democratic Party and the subsequent revision of the Funds Settlement Act and the Financial Instruments and Transactions Act. In fact, it is progressing at a very fast pace even compared to other developed countries. In terms of systems, it appears to be ahead of Korea, which prided itself on being a powerhouse in new industries such as IT.
In particular, it is worth noting the regulation of ‘stable coins’ by the revised Fund Payment Act, which was enacted in 2022 and implemented in 2023. Looking at this, the stablecoin included in the regulations of the Funds Settlement Act under the Revised Act is a 'digital money-like stablecoin' among various types of stablecoin, that is, 'is issued at a price linked to the value of legal currency, so the issue price and ‘Promising to repay in the same amount’ was included in the definition of electronic payment method. The meaning is that algorithmic stablecoins, such as Terra and Luna, which have a history of causing ‘immeasurable’ consumer damage, are classified as virtual assets and are regulated by the Financial Instruments and Transactions Act. In addition, banks, money transfer companies, and trust companies were allowed to issue them, and companies carrying out distribution business were designated as 'transaction businesses such as electronic payment methods' and were subject to registration obligations. Comprehensive information regulation, user protection, and money laundering regulations were imposed. and foreign stablecoins were also included and institutionalized as subject to regulation.
After the implementation of the system, various experimental projects are being conducted in Japan, led by companies such as Mitsubishi UFJ Finance Group, SBI Holdings, and GU Technology, to use stablecoins to improve problems in the existing transaction and payment system. Stable coins based on blockchain technology usually have the advantages of real-time payments, real-time synchronization of commerce and payment flows, and securing transparency of transactions based on traceability compared to existing financial payment networks. Through this, attempts are being made to solve the inconveniences of traditional fund transfers, trade settlements, foreign exchange remittances, and securities transaction settlements. Public interest projects such as Hokoku Bank's blockchain-based local currency project in Suzu City, Ishikawa Prefecture, which are carried out from the perspective of regional revitalization, are also worthy of special mention.
What about Korea? First, before considering the policies of financial authorities, which are known to have traditionally had a negative stance on the use of virtual assets as a means of payment, it will be necessary to consider the characteristics of Korea's payment market and system, which are actually somewhat different from those of Japan. Unlike Japan's prepaid payment method, which is focused on traditional commercial payment functions, the K-easy remittance/simple payment network is implemented based on a prepaid method with free transfer and refund functions, and its opening marks the culmination of the existing financial joint network. In light of banking, card payment and settlement processes that are practically implemented close to real-time payment and settlement, the convenience and stability of Korea's existing payment and settlement system are definitely worth evaluating.
Moreover, as is generally known, the fact that Japan is relatively far behind in the direction of a cashless society can be assumed to be one of the reasons behind Japan's efforts to quickly institutionalize stablecoins. In other words, Korea does not have that many problems that need to be solved through stablecoins, and it may be easy to think that it is possible to respond sufficiently based on existing traditional centralized IT systems and technologies.
However, in other fields, such as actual trade transactions and foreign exchange remittances, points of contact that can sufficiently secure the advantages and usability of blockchain technology may be found. What is even scarier is that Japan's advanced systems and experiments are related to the problems of the existing financial and trade payment network. If it leads to a solution and eventually becomes established as an international standard, there is a risk that Korea will fall behind in the formation, introduction, and development of an institutional foundation.
In Korea, preparations for the second phase of virtual asset legislation are in full swing, and it is important to keep an eye on the development of Japan's system surrounding stable coins.
Stablecoin is a digital currency developed to solve the severe volatility problem of existing virtual assets, ensuring the safety of value by linking it to stable assets such as the US dollar or gold.
DAO (Decentralized Autonomous Organization) A form of organization that is not operated under the direction of a central manager, but rather operates according to individual autonomous decision-making. Blockchain technology, etc. are used
A means of electronic payment refers to a certificate issued by storing monetary value electronically. You can charge the amount through electronic service and use it like cash.