Stablecoin Disagreement Delays South Korea’s Landmark Crypto Law
South Korea’s long-awaited Digital Asset Basic Act (DABA), a sweeping piece of legislation designed to regulate cryptocurrency trading and issuance, has been pushed back as regulators remain divided over how to govern stablecoins in one of Asia’s most active digital-asset markets.
At the heart of the delay is a fundamental disagreement over who should be allowed to issue won-pegged stablecoins.
According to multiple local media reports, the standoff has slowed legislative momentum and pushed the bill’s submission timeline into 2026, with full implementation now unlikely before that year.
Banks Versus Fintechs at the Center of the Dispute
The most contentious issue centers on a proposal from the Bank of Korea, which argues that only banks with at least 51% ownership should be permitted to issue KRW-denominated stablecoins. The central bank maintains that traditional financial institutions are already subject to strict solvency, capital adequacy and anti-money-laundering requirements, putting them in the best position to safeguard financial stability.
Regulators at the Financial Services Commission have taken a more flexible stance. While acknowledging the need for systemic stability, the FSC has warned that a rigid “51% rule” could stifle innovation and effectively lock technologically capable fintech and blockchain firms out of the market.
Officials have also argued that such restrictions could undermine competition and limit the scalability of domestic stablecoin infrastructure.
The FSC has pointed to international examples to support its position. In the European Union, most licensed stablecoin issuers under the Markets in Crypto-Assets (MiCA) framework are digital-asset companies rather than banks.
Regulators have also cited Japan’s fintech-led yen stablecoin initiatives as evidence that innovation and consumer protection can coexist under clear regulatory oversight.
Political Opposition Adds to the Deadlock
The disagreement has spilled into South Korea’s political arena.
Lawmakers from the ruling Democratic Party of Korea have publicly opposed the Bank of Korea’s proposal, warning that it risks isolating the country from global stablecoin innovation.
“A majority of participating experts voiced concerns about the BOK’s proposal, with many questioning whether such a framework could deliver innovation or generate strong network effects,” Democratic Party lawmaker Ahn Do-geol said, according to local media. He added that it was difficult to find global precedents requiring institutions from a single sector to hold a mandatory majority stake in stablecoin issuance.
Do-geol also argued that the central bank’s stability concerns could be addressed through a combination of regulatory safeguards and technological controls, a view he said was broadly shared among policy advisors.
Foreign Stablecoins Remain Another Flashpoint
Beyond domestic issuance, foreign-issued stablecoins have emerged as another unresolved issue. An earlier draft prepared by the FSC would allow overseas stablecoins to circulate legally in South Korea if issuers are licensed and maintain a local branch or subsidiary.
That requirement could force companies such as Circle, which issues USDC, the world’s second-largest stablecoin, to establish a physical presence in the country before their tokens can be used domestically. While proponents say this would strengthen oversight, critics warn it could discourage foreign participation and reduce liquidity in local markets.
Legislative Timeline Slips to 2026
According to Yonhap News, government officials are still working through these unresolved issues and now expect to submit the Digital Asset Basic Act sometime in 2026. The delay reflects “major issues that raise disagreements with relevant organizations, including stablecoin issuers,” the report said.
The bill, first proposed in June, would permit the issuance of won-pegged stablecoins and require issuers to entrust their reserve assets to authorized custodians such as banks. Lawmakers see the framework as a potential catalyst for South Korea’s digital-asset sector, which has grown rapidly despite years of regulatory uncertainty.
Addressing stablecoin issuance was a key campaign promise of President Lee Jae-myung, who also expressed support for allowing the national pension fund to invest in digital assets and for launching exchange-traded funds tied to Bitcoin.
