South Korea’s long-running effort to build a stablecoin regulatory framework has reached a decisive moment, with lawmakers setting a firm December 10 deadline for the government to deliver a draft bill.
If regulators miss that date, key legislators say they will move ahead on their own, ending months of stalled negotiations over how a won-pegged stablecoin should be issued and who should be allowed to control it.
Seoul Divided Over Whether Banks or Tech Firms Should Lead Stablecoin Issuance
According to reports from Seoul, the ruling party issued what it described as a final notice to financial authorities, urging them to submit the government’s proposal for the so-called “Phase 2 Legislation on Digital Assets,” which focuses specifically on stablecoin oversight.
Source: MK NewsPolitical and financial officials held a closed-door meeting at the National Assembly on December 1, where the biggest point of contention resurfaced: whether banks must take the lead in issuing stablecoins or whether technology firms should be allowed a more active role.
Some lawmakers have argued for a minimum 50% bank stake, citing the Bank of Korea’s long-standing warnings that privately issued digital won tokens could affect monetary policy and destabilize the financial system.
Others, including parts of the ruling party and the Financial Services Commission (FSC), prefer lowering the barrier to allow fintech participation, saying excessive restrictions could limit innovation.
The FSC later issued a public statement clarifying that no final decision had been made on whether a consortium or a 51% bank stake would be permitted.
The regulator confirmed that stablecoin legislation was discussed during Monday’s policy consultation and that both sides agreed to prepare a government bill as soon as possible.
However, specifics remain unsettled, prolonging a delay that has already pushed expected timelines several times.
This debate has taken on broader urgency as rival political parties race to introduce their own drafts.
The National Assembly’s Political Affairs Committee is currently reviewing three separate bills, each proposing rules for issuance, collateral management, internal controls, and minimum capital requirements of about 5 billion won.
The bills differ on issues such as whether stablecoin issuers should be allowed to offer interest on holdings, reflecting ongoing disparities in policy direction.
New AML and Travel Rule Measures Add Pressure to South Korea’s Stablecoin Push
The pressure is further intensified by parallel regulatory developments across government. The Financial Intelligence Unit is reorganizing its anti-money laundering protocols for stablecoins and preparing research that will shape future AML guidelines.
South Korea is also moving toward a tighter travel rule regime, with plans to extend reporting requirements to transactions under 1 million won to prevent users from bypassing identity checks.
Authorities have indicated that enhanced KYC rules and stricter oversight will accompany any new stablecoin system.
Meanwhile, the Bank of Korea has expressed fresh concerns. In an October report, the central bank warned that improperly collateralized stablecoins could trigger depegging events and disrupt capital flow management.
It argued again that only regulated financial institutions should issue stablecoins, stressing that non-bank issuers could effectively engage in deposit-like activities without the safeguards banks must follow.
Despite regulatory disagreements, the domestic market is already moving ahead. Naver Financial has completed development of a stablecoin wallet for Busan’s Dongbaek-jeon program, which will convert the city’s prepaid local currency into a blockchain-based token.
KakaoBank has begun building infrastructure for a KRW-denominated “Kakao Coin,” indicating growing corporate interest in digital won products. Major banks have also explored a consortium-issued stablecoin targeted for late 2025 or early 2026.
These advancements show why lawmakers are determined to meet the current legislative window.
However, the regulatory uncertainty mirrors other delays in South Korea’s digital asset agenda, including the country’s virtual asset taxation regime.
Despite being approved in 2020, Korea’s crypto tax law has been postponed multiple times and remains scheduled for 2027, with many of the required systems still incomplete.
South Korea has fallen behind major economies such as the United States, the European Union, and Japan, all of which have already formalized stablecoin structures.
Industry groups warn that further delays could weaken competitiveness, especially as dollar-based tokens like USDT continue to dominate global markets.
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