Foreign media reports suggest that discussions on stablecoin regulation in South Korea may not wait until the full "Digital Asset Basic Law" is passed. According to a policy report released on July 29, regulators could first introduce transitional licensing guidelines to allow companies to clarify the boundaries of the issuance, use, and payment services of Korean won stablecoins in advance.
It is recommended to issue transitional rules first.
This report, published by Hashed Open Research and the Solana Policy Institute, argues that if all rules have to wait until the entire law is completed, businesses will continue to face regulatory gaps in stablecoin issuance and payment scenarios.
The report recommends that South Korea first clarify several fundamental aspects, including licensing requirements, the permitted scope of business, and applicable rules for stablecoin payment services. This would allow regulated institutions to complete preparations before the formal law takes effect.
The article also mentions that Kim Hyo-bong, a South Korean legal professional, publicly stated that South Korea could refer to the EU's approach to MiCA. The EU, before fully implementing the overall framework, first finalized the relevant provisions for stablecoins, which is seen as a reference path for phased regulation.
Bank control remains the focus of negotiations
The most contentious issue currently is who should lead the issuance of stablecoins. Ahn Do-jeol, a lawmaker from South Korea's Democratic Party, stated that policymakers are discussing a compromise: banks would hold a majority stake in the issuer, while fintech companies or other non-bank institutions would handle day-to-day operations.
One previously discussed structure involves banks holding over 50% of the shares, while fintech companies hold 34% and have operational control. Supporters argue that this arrangement combines the compliance and risk management capabilities of banks with the product and technological capabilities of tech companies; opponents, however, worry that bank dominance could stifle market competition.
The Bank of Korea has consistently favored banks leading the issuance of stablecoins. The main reasons are related to monetary management, foreign exchange flows, and financial stability. Central bank officials are concerned that if the conversion between Korean won stablecoins and US dollar stablecoins is too convenient, it could increase the difficulty of managing cross-border capital flows.
Ten proposals may be incorporated into a single bill.
South Korea's Financial Services Commission has informed the National Assembly that it plans to work with the ruling coalition to prepare a comprehensive "Digital Asset Basic Law." Currently, 10 proposals related to digital assets and stablecoins are under review, but the regulator has not yet announced a formal submission date or disclosed the final text.
- Issuance and circulation of stablecoins
- Trading Platform Code of Conduct and Information Disclosure
- Internal control and system resilience requirements
South Korea's current Virtual Asset User Protection Act mainly focuses on custody, unfair trading, and user protection, with less attention paid to issuer regulation and market structure rules. Therefore, the stablecoin system is seen as a key focus for the next stage.
The definition of overseas stablecoins also needs to be clarified.
The report also suggests that regulators need to clarify as soon as possible which digital asset businesses banks and other financial institutions can participate in. Furthermore, there should be clearer licensing standards for overseas stablecoins offering services to South Korean users.
Questions that remain to be answered include: whether overseas issuers need to establish local branches in South Korea, whether they need to meet reserve and custody standards, and whether they must obtain approval within South Korea. These issues are currently unresolved.
The article states that several core issues still need to be addressed in subsequent negotiations with South Korea, including bank shareholding ratios, the participation of non-bank institutions, the protection of reserve assets, and the regulatory treatment of overseas stablecoins. To date, the South Korean National Assembly has not announced a voting date or given an implementation deadline.
