Regulatory Issues: South Korea’s plan to roll out stablecoins is being pushed back as top regulators fight over who should control this new form of money and how strict the rules should be. The clash has slowed legislation in parliament and left banks, tech firms, and crypto users waiting for clear guidelines.
What is happening
South Korea wants to create clear rules for stablecoins, especially those pegged to the Korean won, to bring them into the regulated financial system and protect users. Demand is already high, with stablecoins making up a large share of crypto flows from Korean exchanges in 2025.
However, the rollout is stalled because the Bank of Korea (BOK) and the Financial Services Commission (FSC) disagree on who should have final power over stablecoin issuers and how tight the controls should be. This dispute has delayed several draft bills that lawmakers hoped to pass by the end of 2025.
Central bank vs financial regulator
The BOK argues that stablecoins are similar to bank deposits and could affect monetary and financial stability if not tightly controlled. It wants banks to own at least 51% of any stablecoin issuer and supports strong tools such as joint inspections and emergency powers over issuers.
The FSC is pushing back, saying that giving the central bank broad emergency powers over private stablecoin issuers goes too far. It argues that smaller issuers do not pose systemic risks on the same level as banks and that overregulation could kill innovation before the market has a chance to grow.
Political and legislative gridlock
Lawmakers from both the ruling Democratic Party and the opposition have submitted multiple stablecoin bills, but key details remain unresolved. Drafts generally agree on minimum capital for issuers in the range of several billion won and requirements for fully backed reserves, but there is disagreement over whether stablecoin holders should be paid interest and what exact powers regulators should have.
This gridlock means the timeline for a full legal framework has slipped, with expectations of a completed law now pushed beyond earlier 2025 targets. As a result, South Korea risks falling behind the United States and Europe, where stablecoin regulations and products are advancing more quickly.
Impact on banks, tech firms, and users
Major Korean banks and big tech companies like Naver and Kakao have been preparing won-pegged stablecoins and forming alliances to be ready once rules are finalized. Some banks had already shifted focus away from the central bank digital currency (CBDC) pilot toward private stablecoin projects, seeing more realistic commercial opportunities there.
Because of the regulatory clash, these pilots and business plans remain in limbo, with institutions hesitant to launch large-scale products without legal clarity. For users, this means continued heavy reliance on foreign currency stablecoins and offshore platforms, rather than locally regulated, won-based tokens.
What to watch next
Key signals to watch include whether the BOK and FSC can reach a compromise on ownership rules and emergency powers, and which version of the competing bills gains momentum in the National Assembly. Market participants are also watching if lawmakers decide to allow interest-bearing stablecoins, which could make them more attractive but also more disruptive to traditional deposits.
If a balanced deal emerges, South Korea could still become a major hub for regulated, won-backed stablecoins, combining strong consumer protection with space for banks and tech firms to innovate. If the standoff continues, however, innovation may shift offshore while domestic users and companies wait on the sidelines.
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