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South Korea‘s government and the Bank of Korea plan to amend the Foreign Exchange Transactions Act this year so that stablecoins are formally recognised as payment instruments, Ambcrypto reported on October 24. The proposed change lands as the stablecoin sector shows a split between technical price action and underlying adoption.
Ambcrypto cited DeFiLlama data showing Tether’s USDT down more than 2.5% over the past 12 months. Because USDT makes up more than half of the total stablecoin market, its outflows remain a major driver of the sector’s nearly $8 billion decline from its $315 billion market cap at the start of the year.
Also read: Tether backs Saber Money for Asia-Pacific and Gulf payments expansion
Key facts
- South Korea’s government and central bank plan to amend the Foreign Exchange Transactions Act this year to treat stablecoins as payment instruments.
- USDT is down over 2.5% over 12 months and holds more than 50% of the stablecoin market.
- The total stablecoin market cap has fallen almost $8 billion from its $315 billion yearly opening.
- Circle’s USDC recorded a 4.7% net decrease over the last 30 days, according to DeFiLlama.
- Falcon USD (USDf) gained over 42%, pushing its market value above $1 billion, while RLUSD, BUIDL USD and U also saw inflows.
A regulatory tailwind for newer tokens
DeFiLlama figures cited by Ambcrypto show older stablecoins shedding capital over the last 30 days while newer products attract deposits. The split matters in Seoul because recognising stablecoins as a means of payment could raise both their use and their demand. If rules make settlement in stablecoins clearer, tokens that have already built traction may find it easier to reach merchants and users.
The open question Ambcrypto raises is whether those newer entrants can convert rising adoption into sustained market growth, rather than simply absorbing flows from incumbents.
Also read: Utexo Plans October USDT Launch on Bitcoin via RGB Protocol
Bitcoin holds up while stablecoin liquidity thins
The timing is notable because capital flows have been shifting. Unlike earlier cycles, when macro fear pushed investors toward safe havens, gold and silver have been under pressure. Gold traded below $4,000 an ounce for the first time since July 29, and silver was 54% below its January record and at its lowest since November, per the report.
Bitcoin, by contrast, was up more than 23% from its late-July low of $65K at the time of writing, though still about 36.5% below its $126K peak. Over the same window the stablecoin market cap fell back to July levels and remained roughly 5% below its $321 billion peak. Crypto has therefore held up even as stablecoin liquidity weakened, a divergence Ambcrypto frames as adoption-driven momentum supporting the market while liquidity takes a hit.
Why it matters
Regulatory recognition in a major market changes the practical status of stablecoins: they move from a grey area into a defined payment role, which affects exchanges, payment firms and merchants that might otherwise hesitate. The shift also alters the competitive field. If demand rises, newer tokens that have already drawn inflows could gain a foothold against USDT and USDC, whose share has been slipping. For readers, the story is less about a single token than about whether adoption can grow while overall liquidity shrinks.
What to watch
The concrete next step is the amendment to the Foreign Exchange Transactions Act, which Ambcrypto says is planned for this year, along with confirmation from the Bank of Korea and the government on its scope. Stablecoin market cap and the inflow trends for USDf, RLUSD, BUIDL USD and U will show whether adoption keeps diverging from liquidity.
This article is informational and is not financial advice. Crypto markets are volatile and uncertain, and readers should do their own research before making any decision.
Reported by ambcrypto.com.
Source: AMBCrypto