Regulatory Showdown: FSC and Bank of Korea Clash Over Stablecoin Authority in New Digital Asset Plan
South Korea's financial regulators are drawing battle lines over who controls the future of money.
The Power Struggle
Forget backroom deals—this fight's out in the open. The Financial Services Commission (FSC) and the Bank of Korea (BOK) are locked in a bureaucratic tug-of-war. At stake? Who gets to regulate the stablecoins that could one day flow through the nation's digital veins. The FSC's new digital asset framework stepped on some toes, apparently claiming territory the central bank views as its own. It's the financial equivalent of two parents fighting over who gets to drive the family car—while the car's already rolling downhill.
Why Stablecoins Matter
This isn't just paperwork. Stablecoins are the bridge between volatile crypto and everyday commerce. Whoever sets the rules controls that bridge. The BOK, keeper of monetary policy, sees stablecoins as a direct challenge to its sovereignty over the won. The FSC, tasked with market oversight, views them as just another asset class to be tamed. Neither wants to be the agency that missed the next big thing—or the one that let a crisis happen on its watch.
The Global Context
Seoul isn't operating in a vacuum. From Japan's proactive FSA to the EU's MiCA framework, regulators worldwide are scrambling to cage the crypto beast. South Korea's internal spat risks leaving it behind, creating a regulatory patchwork that confuses innovators and invites the very risks they're trying to mitigate. It's the classic innovator's dilemma, played out with government letterhead.
The Stakes for Crypto
For the local crypto scene, clarity is oxygen. This conflict creates a fog of uncertainty, chilling investment and stalling development. Exchanges and projects are left guessing which master to serve, potentially stifling a sector that thrives on decisive rules of the road. The delay itself becomes a competitive disadvantage—a gift to financial hubs with their act together.
The Bottom Line
Until the FSC and BOK settle their differences, South Korea's digital asset ambitions remain stuck in committee. The market needs a single, clear rulebook, not two agencies fighting over the pen. In the end, this power struggle reveals a simple truth: regulators often fear losing control more than they desire innovation. The real stablecoin might be the status quo.
FSC to Release Digital Asset Bill Highlighting Stablecoins
Instead of proceeding with the submission of the bill, the FSC WOULD make it public at the same time. This is an effective way of ensuring that there is some form of openness with regard to digital assets. A special briefing would also be given alongside the submission of the bill to ensure that information can be shared with the public. Early next month still stands as the latest deadline for the release of the information to the public.
FSC is cooperating with the Bank of Korea in regard to pending matters. One major issue is related to the issuance of stablecoin. Stablecoin is increasingly being used for the purposes of payment and settlement. Regulators are being extra cautious about stablecoin.
FSC and Bank of Korea Debate About Stablecoin Rules
According to the Bank of Korea, it is better for banks to influence the issuance of stablecoins. It calls for at least fifty-one percent of the issuers to be controlled by banks. According to the Bank of Korea, this would ensure that stability is maintained in currencies. FSC rejects this by pointing out that there is little evidence globally of such banks. Europe’s Virtual Assets Act is supportive of digital asset institutions, while Japan’s first yen stablecoin was issued by a fintech company.
This disagreement is also applicable with regard to oversight. While the Bank of Korea requires unanimous consent and the right of agency inspection, the FSC considers such an extent of control to be unnecessary. A possible middle ground could be made dependent on flexible ownership levels for issuers of various types of instruments. Aside from stablecoin issuers, other areas encompassed by the scheme of the government include licensing, conduct of business, capital, listings, disclosure, oversight, and sanctions.
This announcement is helping to shape the digital assets regulatory framework for Korea in anticipation of the consolidated bill in January. Industry observers are closely monitoring this development as the FSC seeks to strike a proper balance between innovation and stability.
Also Read: South Korea’s FSC Cracks Down on Crypto Lending, Orders Exchanges to Suspend Services
