Korean Won stablecoin legislation faces obstacles; South Korea's stablecoin bill delayed until next year due to dispute over 51% issuance eligibility

The legislative process for stablecoin regulation in South Korea has experienced a noticeable slowdown. Several media outlets report that due to serious disagreements among regulatory agencies on the core issue of “which entities are qualified to issue stablecoins,” the “Digital Asset Basic Act” has been postponed for review until next year. This bill is seen as a key step for South Korea to build a comprehensive cryptocurrency regulatory framework, especially directly affecting the development path of the Korean won stablecoin.

According to a draft proposed by the Korea Financial Services Commission (FSC), stablecoin issuers must allocate all reserve assets to bank deposits or government bonds, and require 100% of the outstanding reserve assets to be managed by compliant custodians such as banks, to reduce systemic risks caused by issuer bankruptcy. Meanwhile, digital asset service providers will be required to fulfill obligations similar to traditional financial institutions, including information disclosure, advertising compliance, and service terms. They may also be liable for compensation in case of hacking attacks or system failures.

The controversy centers on the qualification to issue stablecoins. The Bank of Korea (BOK) advocates that only conglomerates with at least a 51% stake held by banks should be allowed to issue stablecoins to ensure monetary stability and financial security; FSC, on the other hand, opposes setting rigid thresholds, believing this would limit participation by tech companies and weaken financial innovation. There are also disagreements on whether to establish a dedicated stablecoin licensing committee, which has delayed legislative negotiations.

Notably, the draft also opens up space for compliant ICOs, and under strict disclosure and risk control conditions, South Korea may end its comprehensive ban on initial coin offerings (ICOs) that has been in place since 2017. Meanwhile, the ruling party is considering submitting an independent bill to accelerate digital asset regulation.

At the policy level, the new president, Lee Jae-myung, has explicitly supported the development of the Korean won stablecoin to hedge against the global expansion risks of the US dollar stablecoin. The direction of stablecoin regulation not only concerns South Korea’s domestic crypto market but could also become an important benchmark for the Asian stablecoin compliance framework.