a16z Crypto Holds First Standalone Summit in South Korea
'Open Issuance to Nonbanks to Spur Competition'
"If stablecoin issuance is allowed only for banks, the products that emerge will likely resemble the existing financial system. They will not be as fast or as innovative as what entrepreneurs can build."
Miles Jennings, head of policy at a16z Crypto, made the remarks on Oct. 1 at the a16z Crypto Korea Summit held at Josun Palace in Seoul's Gangnam district, as he outlined how South Korea should approach stablecoin regulation. Rather than limiting issuers to banks, he said, authorities should allow qualified nonbank companies to enter the market and promote competition.
a16z Crypto is the digital-asset and blockchain investment arm of global venture capital firm Andreessen Horowitz. The event was a16z Crypto's first standalone summit in South Korea. In a keynote speech, Jennings explained changes in US crypto policy and presented regulatory design ideas South Korea could reference, along with issues domestic companies should prepare for.
A key issue he highlighted was the ownership structure of stablecoin issuers. Referring to discussions in South Korea about requiring banks to hold majority stakes in issuers, Jennings said the US had chosen an approach that gives nonbank companies a chance to issue stablecoins as well.
"In the US, companies do not have to be banks to issue stablecoins if they receive government approval," he said. He called that a better structure for promoting innovation and creating a competitive market. If issuance is concentrated among existing financial companies, products and services will also struggle to move far beyond the framework of traditional finance.
The GENIUS Act, the US stablecoin law enacted in July last year, created a path for qualified nonbank issuers to enter the market. At the same time, it imposes obligations including reserve assets corresponding to issuance and anti-money-laundering compliance. The framework broadens access to issuance while preserving financial safeguards.
Jennings said South Korea's regulatory overhaul would not be an issue only for its domestic market. Because the GENIUS Act also created a path for foreign issuers meeting certain conditions to access the US market, other countries now have a stronger incentive to establish their own stablecoin rules.
"The fact that there is a pathway for foreign issuers is a powerful incentive for other countries to create their own stablecoin regimes," he said. Approval overseas, however, does not grant automatic access to the US market. Separate requirements still apply, including a US assessment of the other country's regulatory framework and issuer registration.
He also said South Korean companies need to examine how far US law could apply beyond its borders. The extent to which the US will regulate overseas transactions is still being discussed as follow-up rules are drafted. Companies should consider not only domestic rules but also the obligations they may face in overseas markets.
Jennings argued that the approach to blockchain regulation itself also needs to change. Traditional financial regulation was designed around companies and intermediaries. Blockchain begins from a different premise because it is a network that anyone can access.
"If you force networks into a company-centered regulatory framework, you end up making them take on the characteristics of companies," Jennings said. "Blockchain should function as public infrastructure that anyone can access and use." Regulators need to distinguish between services provided by companies and open networks if they want to preserve the technology's advantages, he added.
Even if work on the CLARITY Act, a US crypto market structure bill, is delayed, Jennings said the shift of finance onto blockchain would continue. That is because the Securities and Exchange Commission and the Commodity Futures Trading Commission can still give businesses clearer standards through guidance and rules under existing law.
"Regulators have not been given new powers, so companies still need to comply with existing law," he said. "But they will get a clearer explanation of what those laws mean." He added that companies seeking to support institutional participation should design services so financial firms can use blockchain-based offerings while continuing to meet their existing regulatory obligations.
Finally, Jennings said South Korean companies need to participate directly in the legislative process. Without a won-based digital payment instrument, access to a global financial market moving onto blockchain could be constrained and dependence on the dollar could deepen.
"Companies need to communicate their views to the National Assembly and regulators and take part in the stablecoin legislative process," Jennings said. "If the absence of a digital won continues, the country could become cut off from these markets and more dependent on the dollar. That is not necessarily a direction that serves the interests of other countries."