South Korea Unveils Stablecoin Policy Report Proposing Comprehensive Digital Asset Regulation
Key Takeaways
- •The proposed Digital Asset Basic Act would impose licensing, registration, and reporting requirements on cryptocurrency exchanges, custodians, brokers, and advisers.
- •Stablecoin issuers would be required to obtain regulatory approval, maintain adequate capital, and hold reserve assets to guarantee redemptions.
- •The Bank of Korea and the Financial Services Commission remain divided over whether Won-backed stablecoin issuance should be limited to commercial banks or opened to fintech companies.
- •The new bill builds on the Virtual Asset User Protection Act of 2023, which established baseline investor safeguards but left stablecoin-specific rules unresolved.
- •If passed, the legislation would place South Korea alongside the United States, the European Union, and Singapore in having dedicated stablecoin regulations.
South Korea has released a draft law establishing a comprehensive regulatory framework for digital assets, with stablecoin oversight at the center of the proposed legislation as Seoul moves to formalize one of the world's largest cryptocurrency markets.
The proposed Digital Asset Basic Act would introduce licensing, registration, and reporting requirements for cryptocurrency businesses, including exchanges, custodians, brokers, and advisers. It would also create a dedicated legal framework for the issuance and supervision of stablecoins. The bill builds on the Virtual Asset User Protection Act, which took effect in 2023 and established baseline investor safeguards and penalties for unfair trading, but left stablecoin-specific rules unresolved.
Under the proposal, issuers of fiat- and asset-backed stablecoins would be required to obtain regulatory approval, maintain adequate capital, hold reserve assets to guarantee redemptions, and meet operational and governance standards. The bill further outlines refund reserve and redemption obligations designed to protect users.
The legislation follows months of debate between the Bank of Korea and the Financial Services Commission (FSC) over who should be permitted to issue Won-backed stablecoins. The central bank has argued that issuance should be restricted to licensed commercial banks to safeguard financial stability. The FSC has countered by advocating broader participation by fintech and technology firms to encourage innovation. The outcome of that jurisdictional divide will shape whether Korea's Won stablecoin market is dominated by traditional banks or opened to the country's payments and fintech sector.
The draft law also establishes a wider legal framework covering the issuance, trading, custody, and supervision of digital assets. The move represents South Korea's latest effort to position itself as a regional digital finance hub while strengthening consumer protections following the 2022 collapse of the Terra ecosystem, founded by South Korean entrepreneur Do Kwon.
If enacted, the legislation would place South Korea alongside jurisdictions including the United States, the European Union, and Singapore, all of which have introduced dedicated stablecoin rules as governments worldwide race to regulate the rapidly expanding sector.