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South Korea’s stablecoin regulatory framework has been delayed until 2026 as the Bank of Korea and Financial Services Commission clash over who should be allowed to issue the digital assets.
The central bank is demanding that stablecoin issuers be bank-led consortiums with at least 51% bank ownership, while the FSC argues such restrictions would stifle competition and sideline technology firms critical to blockchain innovation.
According to a report published Tuesday by Yonhap News Agency, negotiations around the proposed Digital Asset Basic Act have slowed significantly, with authorities unable to reach consensus on issuer eligibility, governance structures and oversight mechanisms. As a result, passage of the South Korea stablecoin bill is now expected to slip into next year.
At the center of the debate is the Financial Services Commission’s draft Digital Asset Basic Act, a sweeping proposal that would form the second pillar of South Korea’s comprehensive crypto regulatory framework.
Under the current plan, stablecoin issuers would be subject to strict investor protection rules, including how reserves are managed and disclosed.
The FSC proposal would require stablecoin issuers to hold reserve assets only in bank deposits or government bonds, while mandating that 100% of outstanding reserves be entrusted to approved custodians such as banks. The intent, regulators say, is to prevent the collapse of a stablecoin issuer from triggering broader losses for retail investors.
“With this measure, South Korea aims to prevent risks stemming from a stablecoin issuer’s bankruptcy from spilling over to investors,” — Yonhap News Agency, citing the FSC proposal.
Beyond stablecoins, the South Korea stablecoin bill would impose disclosure obligations, advertising standards and terms-of-service requirements on digital asset service providers similar to those applied in traditional finance.
In cases of hacks or system failures, providers could also be held liable for damages regardless of fault, mirroring consumer protection rules used in online retail.
Notably, the draft law would also reopen the door to initial coin offerings for domestic projects that meet stringent disclosure and risk management standards. ICOs have been banned in South Korea since 2017.
Despite agreement on investor protections, the South Korea stablecoin bill remains stuck over a fundamental question: who should be allowed to issue stablecoins in the first place.
The Bank of Korea has taken a conservative stance, arguing that stablecoin issuance should be limited to a consortium in which banks hold at least a 51% ownership stake. The central bank views such a structure as essential to safeguarding monetary stability and ensuring adequate oversight.
The Financial Services Commission, however, has pushed back against imposing rigid ownership thresholds. According to the Yonhap report, the FSC believes restricting issuance to bank-led entities could undermine competition and marginalize technology firms that play a critical role in blockchain innovation.
This disagreement has become the primary obstacle delaying the South Korea stablecoin bill, highlighting differing philosophies between monetary authorities focused on systemic risk and market regulators tasked with fostering innovation.
The dispute extends beyond issuer eligibility to questions of governance and oversight. The Bank of Korea has advocated for the creation of a new consultative committee dedicated to licensing and supervising stablecoin issuers under the South Korea stablecoin bill.
The FSC has rejected that proposal, arguing that a separate body would be redundant. It maintains that the commission already operates as a statutory administrative authority that includes representatives from the central bank and the Ministry of Economy and Finance.
“A separate consultative body would be redundant,” — FSC view cited in Yonhap News Agency’s report.
This institutional tug-of-war has further complicated legislative timelines, with neither side willing to concede ground on oversight authority.
As regulatory talks stall, political momentum around digital assets continues to build. Yonhap reported that the ruling Democratic Party is now working on a separate legislative proposal that consolidates several lawmaker-led initiatives, potentially bypassing some of the bottlenecks facing the South Korea stablecoin bill.
The stakes are high. Local stablecoin initiatives have gained traction since President Lee Jae Myung, elected earlier this year, made the creation of a Korean won–based stablecoin market a policy priority.
His administration has framed the effort as a way to protect South Korea’s monetary sovereignty amid the growing global dominance of U.S. dollar–pegged stablecoins.
The South Korea stablecoin bill represents the second phase of the country’s broader crypto regulatory strategy. The first set of rules, passed in July 2023 and implemented a year later, focused on combating unfair trading practices such as price manipulation and insider trading.
Until regulators bridge their differences, however, South Korea’s stablecoin ambitions remain on hold. The ongoing stalemate illustrates the difficulty of balancing financial stability, innovation and institutional authority in a rapidly evolving digital asset landscape — and suggests that the final shape of the South Korea stablecoin bill may still be far from settled.
