South Korea’s Digital Asset Basic Act, a comprehensive framework to govern crypto trading and issuance, is stalled as regulators grapple with stability and competition concerns over stablecoins. At the core of the dispute is who should have the legal authority to issue KRW-pegged stablecoins. The Bank of Korea argues that only banks with majority ownership—at least 51%—should be allowed to issue stablecoins, citing the need to safeguard financial stability.
The Bank of Korea notes banks already meet stringent solvency and anti-money-laundering requirements, positioning them to manage risk in a fast-growing digital asset market. The Financial Services Commission, by contrast, urges a more flexible approach, warning that a strict 51% rule could stifle competition and hinder fintech innovation. It cites the EU’s Markets in Crypto-Assets regulation and Japan’s yen-stablecoin initiatives as examples of regulated innovation that can accommodate growth.
Foreign-issued stablecoins are another major sticking point. A proposed framework would permit licensed foreign issuers with a local branch or subsidiary to operate in Korea, potentially requiring issuers like Circle to establish a local presence for USDC. Analysts expect the deadlock to delay passage of the bill into January, with full implementation unlikely before 2026. The debate reflects a global question about whether fiat-backed stablecoins should be controlled by banks or fintech firms, a choice with implications for competition, innovation, and regulatory oversight.
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