South Korea’s Stablecoin Legislation Update
In South Korea, the Financial Services Commission (FSC) has failed to meet a crucial deadline to present a new stablecoin legislation, sparking ongoing discussions about the regulatory authority for issuing such cryptocurrencies. Local sources report that the ruling party plans to unveil a stablecoin framework, known as the “Basic Digital Asset Act (Phase 2 Virtual Asset Act),” by the beginning of 2026 at the latest.
Regulatory Challenges and Delays
The National Assembly’s Political Affairs Committee had originally requested the FSC to deliver its draft bill by the 10th; however, the commission communicated difficulties in adhering to this timeline. An official from the FSC acknowledged the setback, stating,
“The FSC was unable to submit the government’s proposal within the requested timeframe,”
while noting that more time was required to align the perspectives of the various involved agencies.
The FSC has committed to presenting the proposed bill to the National Assembly while simultaneously engaging the public to enhance transparency. An official emphasized that this approach aims to ensure the public remains informed and involved in discussions around the legislation.
Collaboration with the Bank of Korea
Collaboration is underway between the FSC and the Bank of Korea (BOK), which is a central player in the discussions regarding the stablecoin bill. Central to the debate is the question of which entities should be allowed to issue these digital tokens. The BOK advocates for a model wherein stablecoin issuers would primarily come from a consortium of banks holding over half the shares of a company, arguing this would help maintain currency stability and protect the financial system.
Conversely, the FSC has expressed reservations regarding this bank-centric issuance model, pointing to a lack of international examples supporting such a constraint. Under the European Union’s Markets in Crypto-Assets (MiCA) framework, a significant majority of stablecoin issuers are non-bank digital currency companies, while Japan has seen a fintech firm launch its first yen-backed stablecoin, JPYC.
Moreover, the BOK is pressing for unanimous consent from all related regulatory authorities, but the FSC contends that its approval alone should suffice. Analysts suggest that a potential middle ground could involve allowing issuers to hold shares relevant to their specific business models.
Future of Stablecoin Legislation
The anticipated stablecoin legislation will aim to set forth extensive regulations governing digital assets. Key areas covered would include licensing requirements, operational standards, rules for capital and solvency, as well as obligations pertaining to listing and disclosure, along with regulatory oversight and enforcement measures.
As this situation develops, observers in the financial and crypto sectors will be closely watching how South Korea navigates its regulatory landscape surrounding digital assets.
