Power Struggle: South Korea’s Financial Regulator and Central Bank Clash Over Stablecoin Authority

Seoul's financial corridors are echoing with a turf war that could define the future of digital money in Asia's fourth-largest economy. The Financial Services Commission (FSA) and the Bank of Korea (BOK) are locked in a high-stakes standoff over who gets to call the shots on stablecoins.

The Battle Lines Are Drawn

At the heart of the clash is a fundamental question: is a stablecoin a payment instrument or a financial security? The FSA, overseeing securities and capital markets, argues for a broad regulatory net. The central bank, guardian of monetary policy and payment systems, sees stablecoins as a direct extension of its monetary sovereignty. Neither institution is backing down.

Why This Regulatory Tug-of-War Matters

This isn't just bureaucratic squabbling. The outcome sets the precedent for how a trillion-won industry operates. Will oversight be fragmented or unified? Will innovation be stifled under overlapping rules, or will a clear framework provide the certainty investors and builders crave? The delay itself is a cost—one that benefits offshore platforms with looser rules, a classic case of regulatory arbitrage where the only winners are the lawyers and consultants drafting the compliance paperwork.

The Global Context: A Race for Clarity

South Korea isn't operating in a vacuum. From the EU's MiCA to evolving U.S. guidance, major economies are scrambling to establish their stablecoin rulebooks. Korea's internal discord risks leaving its vibrant crypto sector in a regulatory limbo just as global competition heats up. The clock is ticking, and market participants are watching—some already hedging their bets with more predictable jurisdictions.

Ultimately, this power struggle reveals a deeper truth: when new technology challenges old hierarchies, the first casualty is often coherent policy. The resolution—or lack thereof—will signal whether South Korea intends to lead the next wave of finance or merely manage its decline.

Korea’s central bank demands banks hold 50% stake in stablecoin issuers

South Korea is considering new rules that could reshape stablecoin markets, proposing that only consortia with commercial banks holding at least a 51% stake may issue won-based stablecoins.

What does this mean for crypto players? pic.twitter.com/eoPAwWNtu7

— Cryptopolitan (@CPOfficialtx) December 2, 2025

The Democratic Party of Korea proposed its Basic Digital Asset Act in June, set to regulate stablecoins. Lawmakers from the political party suggested that non-banks and payment providers issue stablecoins, while the Financial Services Commission acts as the primary regulatory body.

The FSC and the Bank of Korea have yet to resolve their differing opinions on the entity responsible for issuing the won-pegged stablecoins. The central bank of Korea argued that the issuance of the stablecoin should only be permitted to a consortium. The Reserve Bank also suggested that banks should hold a stake of more than 51% in the won-pegged stablecoin.

The Financial Services Commission has not confirmed the bank-led consortium approach, but rejected the 51% stake ratio. A copy of the FSC’s proposals revealed its evaluation of the advantages and disadvantages of various structures. 

The government agency argued that one or more banks controlling more than 50% of a stablecoin issuer may address Korea’s central bank financial stability concerns. Korea’s Banking Act also prohibits banks from owning more than 15% of non-financial companies, which tends to separate finance and industry.

“Issuers such as foreign user access, the real-name verification system, derivatives, and the separation of finance and industry are all tied to existing institutional rules. For a viable digital-asset ecosystem to emerge, these components need to evolve together.”

-Kim Sung-jin, Head of the Virtual Asset Division at the FSC.

The FSC also believes that other non-banking sectors in the economy should also participate in the issuance of the won-pegged stablecoin. The government agency noted that 14 out of 15 EU MiCA-regulated stablecoins are non-banks.

The Bank of Korea and the FSC also clashed over the approval of stablecoin issuance and supervisory authority. Korea’s central bank believes that a unanimous consensus body should approve the issuance of stablecoins in the country. 

The financial institution also demands the authority to request inspections by the Financial Supervisory Commission of stablecoin issuers. The Financial Service Commission rejected the request, arguing that it could give the central bank extreme authority.

The Bank of Korea seeks to define issuers as financial institutions

A prolonged delay in the government bill’s preparation could lead to other legislative bills currently proposed by lawmakers being discussed first. Korea’s Democratic Party was planning to pass the Phase 2 Virtual Asset Bill by reviewing the government legislation.

The Chosun Daily reported that a source from the Democratic Party-affiliated Political Affairs Committee argued that it’s currently difficult to reduce disparities between the Financial Service Commission and the Bank of Korea. The source also stated that failure to submit the government bill could lead to a prolonged discussion process. 

He believes the government should first review the legislation proposed by lawmakers. Lawmakers from the Democratic Party, including Ahn Do-gul, Min Byung-deok, and Kim Hyun-jung, are among the lawmakers who have proposed bills. Others from the People Power Party, such as Kim Eun-hye and Kim Jae-sub, have also proposed legislation.

The Bank of Korea also previously suggested defining issuers as financial institutions. The initiative poses legal challenges since the Lee Jae Myung administration does not classify digital assets as financial investment products under the Capital Markets Act.

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