South Korea’s Stablecoin Bill Deadline Missed — Banks vs. Innovation Clash Escalates

South Korea's stablecoin regulation hits a wall. The deadline for a critical bill has passed, leaving the digital asset industry in limbo and setting the stage for a bare-knuckle fight between traditional banks and crypto innovators.

The Regulatory Vacuum

Lawmakers failed to deliver promised legislation by the year's end. This creates a dangerous gap—no clear rules for issuing or managing stablecoins pegged to the Korean won or other assets. Projects are frozen, capital is sidelined, and the global race for a digital won stalls.

Banks Dig In, Innovators Push Back

Traditional financial institutions lobby hard for restrictive rules, demanding that stablecoin issuance remain their exclusive domain. They cite systemic risk—a classic move from the old guard's playbook when facing disruptive technology. Meanwhile, crypto firms argue this stranglehold kills competition and cedes the future of finance to more agile markets like Japan or Singapore.

The Stakes for Crypto Finance

This isn't just about payments. A regulated, native stablecoin is the essential plumbing for a mature DeFi ecosystem. It's the bridge between volatile crypto and real-world value. Without it, South Korea's vibrant crypto scene remains a speculative playground, missing its shot at building the next generation of financial infrastructure—while Wall Street and its digital counterparts quietly build theirs.

The delay is a gift to bureaucratic inertia and a blow to anyone who believed the hype about 'fast-track' innovation. Now, the battle lines are drawn: protect the legacy system or fuel the new one. South Korea's finance future hangs in the balance.

That deadline passed without a submission.

Stablecoin Disagreement Holds Up South Korea’s Crypto Bill

The South Korean media outlet Newsis reported that FSC later confirmed it was unable to deliver the proposal on time, saying it needed additional coordination with other agencies.

A spokesperson said the regulator WOULD instead release the government’s position publicly alongside its formal submission to the National Assembly, citing the public’s right to understand the framework being proposed.

The FSC said it is preparing a draft tentatively titled the Basic Digital Asset Act, also described as Phase Two of South Korea’s VIRTUAL asset legislation.

Officials expect the proposal to be released later this month or early next month, ahead of a consolidated bill the ruling party has pledged to introduce in January 2026 under President Lee Jae-myung’s election commitments.

Behind the delay is an unresolved dispute between the FSC and the Bank of Korea over who should lead stablecoin issuance.

The central bank has argued that stablecoins function similarly to currency and deposit-like instruments and should therefore remain under bank control.

It has pushed for a rule requiring domestic banks to hold at least a 51% stake in any stablecoin-issuing entity, along with inspection powers and veto authority over approvals.

The FSC has resisted that approach, pointing to overseas models, noting that most issuers under the European Union’s MiCA framework are non-bank digital asset firms and that Japan’s first yen-linked stablecoin was issued by a fintech company.

FSC officials have said bank-led issuance lacks global precedent and could limit participation by technology firms that already operate digital payment infrastructure.

Negotiations between the FSC and the BOK remain ongoing. Officials familiar with the talks say a compromise may involve flexible ownership thresholds based on business scope, though no agreement has been confirmed.

The disagreement has stalled coordination long enough for lawmakers to begin reviewing multiple competing drafts at the National Assembly’s Political Affairs Committee.

Delays in Stablecoin Rules Raise Fears South Korea Is Falling Behind

Industry groups have warned that continued delays risk leaving South Korea behind jurisdictions such as the United States, the European Union, and Japan, all of which have already established stablecoin rules.

Domestic stablecoin issuance remain illegal in South Korea, even as companies prepare infrastructure behind the scenes.

Naver Financial has developed a blockchain wallet for Busan’s local currency program, while KakaoBank has begun work on a KRW-denominated digital token. Major banks have also explored a joint stablecoin project targeting late 2025 or early 2026.

Naver Financial, the fintech arm of South Korean internet giant Naver, is preparing to roll out a stablecoin wallet in Busan.#SouthKorea #Cryptohttps://t.co/40QBNaXJ9C

Regulatory urgency has been heightened by recent enforcement challenges. In December, Korean authorities disclosed that Binance froze only a small portion of funds stolen during last month’s Upbit hack, despite urgent requests from police and the exchange.

Korean authorities say @Binance froze only a small portion of the crypto stolen during last month’s @Official_Upbit hack.#SouthKorea #Binancehttps://t.co/o5VVQN9tYp

Investigators said hackers rapidly laundered assets across chains and wallets, highlighting the difficulty of coordinating responses without clearer oversight frameworks.

Experts said the incident shows the need for faster, more structured controls as digital-asset activity expands.

South Korea’s stablecoin debate is also unfolding against a backdrop of delayed crypto policy more broadly. The country’s virtual asset tax regime, approved in 2020, has been postponed several times and is now scheduled for 2027.