## South Korea's Cryptocurrency Regulations Remain Deadlocked Amidst Policy Conflicts, Ongoing Clash Over Stablecoin Issuance Rights

The long-anticipated Digital Asset Basic Act (DABA) is facing unexpected obstacles. Although the law is meant to oversee one of Asia’s most vibrant cryptocurrency markets, regulators are clashing head-on over the issuance of won-pegged stablecoins, causing the legislative process to stall.

### The gap between the central bank and financial authorities remains unbridged

The core issue lies in fundamental disagreements over whether fintech companies or banks should hold the management rights for stablecoins.

The Bank of Korea (BOK) has a clear stance. It argues that only institutions holding more than 51% of shares should be permitted to issue stablecoins. The reason cited is financial stability. The banking sector is already subject to strict capital adequacy regulations and anti-money laundering measures, which are seen as the last line of defense in protecting the currency’s value.

Meanwhile, the Financial Services Commission (FSC), which oversees monetary policy, is pushing back against this framework. While stability is necessary, the rigid 51% rule could significantly restrict market competition and hinder innovation. There are concerns that this could make it difficult for fintech firms with advanced technical expertise to enter the market, delaying the development of scalable blockchain infrastructure.

### International examples serve as counterarguments

The FSC points to the European Union’s regulatory model. Within the EU, most approved stablecoin issuers are not banks but digital asset companies. Additionally, Japan’s fintech-led yen stablecoin projects are cited as successful examples of innovation within a regulated environment.

There is also opposition from both major political parties. Democratic Party lawmaker Andu Gyul expressed concerns during a seminar, stating that the majority of experts viewed the BOK’s proposal unfavorably, and that “it’s even difficult to find a global precedent that mandates 51% ownership in a specific sector.” He added that concerns over stability can be sufficiently mitigated through regulatory and technical measures, a view widely shared among policymakers.

### Approval standards also apply to foreign-issued stablecoins

The debate is not limited to won-pegged stablecoins. The criteria for domestic use of foreign-issued stablecoins are also under scrutiny. The draft proposed by the FSC states that for overseas stablecoins to operate legally in Korea, they must obtain a license and establish a local branch or subsidiary. This would require global-scale stablecoins like USDC issued by Circle to set up a local presence.

### Implementation is expected after 2026

Due to the deadlock among regulators, the bill’s passage is delayed until at least January, and full enforcement is unlikely before 2026. Although Korea began policy shifts earlier this year after nearly a decade of de facto bans on cryptocurrencies, this initial step has encountered more obstacles than anticipated.

The dispute over stablecoin issuance rights highlights a broader global issue: which entity should manage fiat-backed digital assets. This decision could significantly influence market competition, the pace of fintech development, and the central bank’s control over currency. Korea’s choice may serve as a precedent shaping regulatory trends across Asia.