A major hurdle has been thrown in South Korea’s quest to give its digital assets regulatory oversight, as ministers are yet to agree on how to deal with stablecoins, delaying the proposed crypto legislation into next year.
According to Yonhap News Agency, there have been hold-ups in the progress of the Digital Asset Basic Act due to disagreements among financial regulators, and it remains an integral part of cryptocurrency reform in South Korea.
Stablecoin Rules Trigger Policy Deadlock
At the center of the delay sits a dispute over who should have the authority to issue stablecoins. The Financial Services Commission has led talks on drafting investor protection rules, driven by the rapid growth of stablecoin usage in domestic markets. However, consensus on issuer eligibility remains elusive.
The debate has intensified as South Korea looks to model parts of its framework on the US GENIUS Act, which introduced clearer reserve and compliance standards for stablecoin issuers. Under current proposals, issuers would need to fully back stablecoins with reserves held by qualified custodians such as commercial banks.
The Bank of Korea has taken a firm stance, arguing that banks should serve as the primary and possibly exclusive stablecoin issuers. Central bank officials say limiting issuance to bank-led groups would protect monetary stability and reduce systemic financial risk.
At the same time, however, the FSC challenged rigid rules on ownership when it decided that firms that are not banks should not be barred from the fintech industry. Excluding such firms may hamper competition and innovation in payments technology, which would be damaging to the South Korean vision to remain competitive in the fintech sector worldwide.
Oversight Structure Adds to Tensions
There are also disputes regarding governance. The BOK wants a separate committee to oversee and license issuers of stablecoins, whereas the FSC argues that it would be manageable within current administrative bodies without increasing bureaucracy.
Such issues have delayed the passage of the legislation, with the ruling Democratic Party now working on an overall cryptocurrency draft bill. Congressmen are working on packaging multiple proposals into one legislation that will end the impasse over the passage of the cryptocurrency regulatory law.
Beyond stablecoins, the draft legislation would tighten disclosure standards for digital asset service providers and strengthen customer protection requirements. Lawmakers have also reopened discussions around domestic initial coin offerings, which South Korea banned in 2017, signaling a potential policy shift.
Signs of a Broader Crypto Thaw
The regulatory slowdown comes even as South Korea shows signs of warming to the crypto industry. In September, authorities lifted restrictions that barred venture capital firms from investing in crypto companies, allowing them to apply for official venture certification.
In another notable development, Binance completed its acquisition of Gopax, marking its official return to the South Korean market after several years away.
Despite these positive signals, the lack of agreement on stablecoin regulation remains a thorn in policymakers’ sides. As regulators aren’t aligned over the issuer eligibility and oversight structures related to these digital assets, South Korea’s crypto reform agenda probably won’t move forward anytime soon.
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