South Korea's Stablecoin Regulation Delayed Amid Bank Involvement Disputes

South Korea's Stablecoin Regulation Stalled by Banking Disagreements

South Korea appears poised to conclude the year without a clear regulatory framework for domestically issued stablecoins. This delay stems primarily from ongoing disagreements between the Bank of Korea (BOK) and other financial regulators concerning the appropriate role for banks in the issuance process.

According to a report in the Korea JoongAng Daily, the core point of contention revolves around the extent of bank involvement in issuing stablecoins pegged to the Korean Won. The BOK argues that a consortium of banks should hold a majority stake (at least 51%) in any entity seeking regulatory approval to operate as a stablecoin issuer in South Korea. In contrast, other regulators appear more open to broader participation from various industry players.

Banks' Pivotal Role in Mitigating Risks

A BOK official contends that banks, by virtue of their existing regulatory oversight and extensive experience in handling anti-money laundering protocols, are best positioned to serve as the majority shareholders in stablecoin issuers. The central bank asserts that granting banks a leading role in this domain will help mitigate potential risks to financial and foreign exchange stability.

The BOK warns that allowing non-bank companies to take the lead in stablecoin issuance could undermine existing regulations that bar industrial firms from owning financial institutions. This warning stems from the fact that stablecoins effectively function as deposit-taking instruments by collecting funds from users.

In a recent stablecoin study, the BOK wrote that allowing non-bank companies to issue stablecoins is tantamount to permitting them to engage in narrow banking – simultaneously issuing currency and providing payment services. It added that stablecoins issued by technology firms could also pose monopoly risks.

Three Bills Under Review

The Financial Services Commission (FSC) had been expected to introduce a regulatory framework for won-backed stablecoins as part of a government bill last October. However, reports indicate that the National Assembly’s Political Affairs Committee is currently reviewing three bills related to stablecoin issuance submitted by lawmakers from both the ruling and opposition parties.

The proposed legislation includes two bills put forward by the ruling Democratic Party of Korea (DPK) and one from the opposition People Power Party (PPP). While all three proposed bills stipulate a minimum capital of 5 billion won ($3.4 million USD) for issuers, some of the disputed areas include whether stablecoin issuers should be allowed to offer interest on holdings.

As South Korean lawmakers remain divided over a stablecoin framework, local tech giants such as Naver are accelerating their stablecoin-related initiatives amid a potential merger with Dunamu, the operator of the major cryptocurrency exchange Upbit.

According to local reports, Naver Financial is poised to launch a stablecoin wallet next month in collaboration with Hashed and the Busan Digital Exchange.

The BOK’s support for giving banks a leading role in stablecoin issuance aligns with its earlier stance, after Deputy Governor Ryoo Sangdai called for banks to serve as the primary issuers of stablecoins in June 2025.

In July, eight major South Korean banks (KB Kookmin, Shinhan, Woori, Nonghyup, Corporate, Suhyup, Citi Korea, and SC First Bank) reportedly teamed up to launch a won-pegged stablecoin in 2026.