South Korean Regulators Poised to Greenlight Domestic Stablecoin Issuers
Seoul readies the regulatory runway for homegrown stablecoins.
### The Won Goes Digital
South Korea's Financial Services Commission (FSA) is drafting a framework that could see domestic companies authorized to issue Korean Won-pegged stablecoins. The move signals a strategic pivot from blanket skepticism to controlled adoption, aiming to capture a slice of the multi-trillion dollar digital asset economy while keeping capital flows onshore.
### Cutting Out the Middlemen
The proposed approvals would bypass the current reliance on offshore dollar-pegged giants like Tether and USDC. It grants local fintechs and banks a direct conduit to tokenize the national currency—creating a digital twin of the won that lives on-chain. Think of it as building a national highway for value, instead of paying tolls on foreign-owned roads.
### The Compliance Trade-Off
Expect a regulatory leash shorter than most. Issuers will likely face reserve requirements stiffer than a central banker's collar, real-time audit trails, and KYC protocols that make a Swiss bank look lax. The FSA isn't handing out free passes; it's issuing licenses to build fortified vaults with transparent walls.
### A Calculated Bet on Sovereignty
This isn't just about financial innovation—it's a hedge against monetary irrelevance. By fostering a domestic stablecoin ecosystem, South Korea aims to future-proof its currency's role in digital trade and DeFi. It’s the financial equivalent of building a seawall before the crypto tide rises any higher.
### The Bottom Line
South Korea isn't just opening a door; it's building a new gatehouse with its own guards, rules, and currency printer inside. For the crypto sector, it’s a landmark validation that sovereign-aligned digital assets have a seat at the mainstream table. For traditional finance? Just another reminder that the future of money is being coded in plain sight—while they're still reconciling spreadsheets from Q3.
Chang-young highlights the risks and challenges of stablecoin regulation
Chang-young stated that large-scale cash transfers may result from money flowing into U.S. dollar stablecoins when exchange rate changes trigger market expectations. Furthermore, he claimed that regulation is challenging because various non-bank institutions issue stablecoins.
He continued by stating that retail central bank digital currencies (CBDCs) do not offer significant advantages and that South Korea’s quick payment system is highly developed. Chang-young asserted that the central bank is deploying tokenized deposits and wholesale CBDCs concurrently with pilot programs to preserve a two-tier structure.
Chang-young also believes that loosening and streamlining rules will boost actual economic activity in the NEAR future. Still, he warned against forgetting the consequences of the 2008 financial crisis and contends that reform shouldn’t turn into a contest to lower standards. He believes regulations should be tightened, not loosened, at least in the area of digital banking.
Governor Chang-young’s warnings help explain why progress on crypto legislation has stalled. Tech in Asia, a news outlet, reported on January 26 that South Korea has delayed the second phase of the virtual asset law, which aims to regulate digital assets such as stablecoins, amid disagreements over who should be allowed to issue them and how exchanges should be regulated.
This delay of the second-phase virtual asset began last year. On December 30, deep regulatory disagreements over stablecoin monitoring led South Korea to postpone its long-awaited revision of its digital asset system to this year.
To create a thorough legal framework for cryptocurrency activity, the Financial Services Commission made the Digital Asset Basic Act. The law sought to establish no-fault liability, allowing operators of digital assets to be held accountable for user losses even in the absence of evidence of negligence.
The Digital Asset Basic Act aims to improve compliance standards among exchanges and service providers by imposing stricter disclosure requirements and customer protection measures. However, authorities struggled to resolve disputes over control of reserves, enforcement authority, and stablecoin governance. As a result, the bill’s filing was postponed until 2026.
Regulators suggested mandating that issuers keep all of their reserves in government bonds or bank deposits, entirely entrusted to authorized custodians. The Bank of Korea argued that stablecoins should be issued only by bank-controlled consortia with at least a 51% ownership stake to preserve monetary stability.
As previously reported by Crptopoiltan, fixed ownership thresholds were, however, challenged by the Financial Services Commission (FSC), which cautioned that they may marginalize tech companies and impede innovation in digital finance.
Regulatory disputes stall South Korea’s stablecoin legislation
The Financial Services Commission’s filing with the National Assembly was supposed to be reviewed this month, but has been delayed again due to ongoing disagreements among government agencies, business stakeholders, and political organizations.
According to the report, essential questions remain whether banks or other approved companies should be the primary issuers of won-pegged stablecoins and whether regulations separating finance from virtual assets should be loosened to promote innovation.
Critics argue that the proposed 15%–20% shareholding limitations for exchange stockholders are too restrictive.
Discussions about virtual asset transactions by listed businesses and exchange-traded funds (ETFs) that rely on the law’s implementation have stalled due to the delay.
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