Stablecoin rules stall South Korea’s digital asset legislation

Debates on South Korea’s comprehensive Digital Asset Basic Act have spilled into 2026 with no end in sight as regulators continue to clash over who should control stablecoin issuance and how far major cryptocurrency exchanges should be regulated.

Lee Eog-weon, the Financial Services Commission (FSC) chair, had promised that the second-phase virtual asset legislation would be ready by the end of last year. However, divisions between the FSC, the Bank of Korea, industry participants, and political parties have pushed implementation into the new year, with no clear timeline for resolution.

What is South Korea’s disagreement about stablecoins?

The Bank of Korea also wants the issuance of won-pegged stablecoins to be dominated by banks, with Governor Rhee Chang-yong stating that the structure will help to prevent monetary policy complications and risks.

The FSC does not share the same position with the Bank of Korea on this matter, as it calls for a more inclusive authorization system that would allow fintech companies and other approved entities to participate in the stablecoin market.

Industry groups want more participation for fintechs, stating that excessive bank control will yield the adverse effect of stifling innovation. They say this will in turn affect South Korea’s ability to compete on the international stage as global digital payment systems advance.

The proposed legislation would require stablecoin issuers to maintain reserves that are over 100% of their circulating supply. This reserve will be held exclusively in bank deposits or government bonds and must not be part of the issuer’s balance sheet.

The draft also introduces no-fault liability for digital asset operators, making them responsible for user losses even when there’s no proof of negligence.

Exchange ownership caps draws opposition

A separate proposal that is being contested would see a cap on individual voting shares in major exchanges at 15% to 20%.

The FSC argues that concentrated ownership allows founders to exercise excessive control and capture disproportionate profits from transaction fees.

The restrictions will mean that those who own significant stakes in the affected companies that exceed 20% may have to divest some of their holdings.

Industry critics warn the caps could violate property rights, destabilize management structures, and deter investment at a time when South Korean exchanges are faced with more competition.

What are the implications if this bill continues to lag?

The legislative impasse has blocked progress on related initiatives. 

Plans to launch spot Bitcoin exchange-traded funds, announced as part of the government’s 2026 economic growth strategy, cannot proceed without digital assets being recognized as underlying securities under the second-phase law. Korea Exchange has declared itself ready to list and trade crypto ETFs, but regulatory uncertainty continues to delay its fruition. 

A pilot program allowing approximately 3,500 corporations to transact in virtual assets, originally scheduled for the second half of last year, has similarly stalled. Financial authorities say they will only consider corporate access after implementing the broader legislative framework.

These delays come as other jurisdictions advance. The US approved spot Bitcoin ETFs in January 2024 and passed the GENIUS Act, its legislation on stablecoins in 2025. Hong Kong enacted stablecoin legislation in August 2025, while Japan launched its first yen-backed stablecoin in October.

The People Power Party plans to introduce a separate second-phase bill through a special committee, suggesting that all National Assembly deliberations will only begin once that legislation is tabled.

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