South Korea’s long-anticipated Digital Asset Basic Act has been pushed back to 2026, as disagreements between key regulators stall progress on the country’s most comprehensive crypto framework to date. The delay underscores deep divisions over how stablecoins should be issued and supervised in one of Asia’s most active digital asset markets.
At the centre of the impasse is a turf battle between the Financial Services Commission (FSC) and the Bank of Korea (BOK), particularly over won-pegged stablecoins. The FSC has argued for a more flexible regime that would allow non-bank entities, including technology firms, to participate in stablecoin issuance as a way to foster innovation and competitiveness in the domestic crypto sector. Regulators aligned with this view see stablecoins as a critical layer of future financial infrastructure that should not be monopolised by traditional banks.
The Bank of Korea, however, has taken a far more conservative stance. Citing risks to monetary sovereignty and financial stability, the central bank has insisted that stablecoins tied to the Korean won should only be issued by bank-led consortia, with banks holding at least a 51% controlling stake. The BOK argues that anything less could expose the financial system to systemic shocks, especially in periods of market stress or mass redemptions.
Despite the delay, the draft legislation reflects a tougher posture on investor protection. Under the proposed rules, stablecoin issuers would be required to back their tokens with 100% reserves held in low-risk assets such as bank deposits or government bonds. These reserves must be managed by independent custodians, typically banks, to ensure a bankruptcy-remote structure that protects users’ funds if an issuer fails. The bill also introduces strict liability provisions, holding digital asset operators fully responsible for losses arising from hacks, technical failures, or security breaches.
The stalled bill follows an earlier phase of South Korea’s crypto regulation, which focused mainly on curbing unfair trading practices such as market manipulation and insider dealing. While that initial framework provided some clarity, the absence of rules governing stablecoins, token issuance, and broader market structure continues to create uncertainty for local crypto firms, fintech startups, and institutional players planning new products.
For now, the regulatory deadlock leaves South Korea in a holding pattern. Industry participants are watching closely to see whether political pressure or market developments will force a compromise between innovation and financial stability, or whether the country risks losing momentum to rival crypto hubs moving faster on clear, comprehensive regulation.
South Korea’s stablecoin legislation faces another delay amid tegulatory uncertainty
