South Korea Stablecoin Framework Stalled Over Bank Control

The development of a comprehensive regulatory framework for Korean won-backed stablecoins has reached a critical stalemate, with South Korea now likely to end the year without establishing clear guidelines for local issuance. According to reports from the Korea JoongAng Daily, the impasse stems from a fundamental disagreement between the Bank of Korea (BOK) and other financial regulators regarding the appropriate level of bank involvement in stablecoin operations. This regulatory conflict has effectively stalled progress on a framework that market participants had widely anticipated would be finalized by late 2025.

The core of the dispute centers on ownership requirements for stablecoin issuers seeking regulatory approval in South Korea. The Bank of Korea has taken a firm position that a consortium of banks must own at least 51% of any stablecoin issuer, effectively ensuring banking sector dominance over the emerging digital asset category. This stance reflects the central bank’s preference for maintaining traditional financial institutions at the center of monetary operations, even as the financial landscape evolves toward digital assets.

The Bank of Korea’s position represents a conservative approach to stablecoin regulation that prioritizes financial stability and systemic control. By requiring banking consortia to maintain majority ownership in stablecoin issuers, the BOK aims to ensure that won-backed digital assets remain tightly integrated with the traditional banking system. This approach would theoretically minimize risks associated with stablecoin operations by subjecting them to the same regulatory oversight and capital requirements that govern conventional financial institutions.

However, this banking-centric model faces significant opposition from other financial regulators who advocate for a more inclusive approach to stablecoin issuance. These regulators argue that limiting stablecoin development primarily to banking institutions could stifle innovation and prevent South Korea from competing effectively in the global digital asset marketplace. The disagreement has created a regulatory deadlock that shows no immediate signs of resolution, potentially delaying the framework’s implementation until 2026 or beyond.

The ongoing regulatory dispute carries significant consequences for South Korea’s position in the global cryptocurrency landscape. Without a clear regulatory framework for won-backed stablecoins, domestic companies face uncertainty in developing digital asset products and services that could compete with established global stablecoins like Tether (USDT) and USD Coin (USDC). This regulatory vacuum may force Korean businesses and consumers to continue relying on foreign-issued stablecoins, potentially limiting the development of a robust domestic digital asset ecosystem.

The delay also impacts South Korea’s broader digital economy strategy, which has increasingly emphasized fintech innovation and digital transformation. The absence of a stablecoin framework creates uncertainty for blockchain projects, financial technology startups, and traditional financial institutions looking to integrate digital assets into their service offerings. As other jurisdictions advance their regulatory approaches to stablecoins, South Korea’s regulatory impasse risks putting the country at a competitive disadvantage in the rapidly evolving digital finance sector.

The resolution of this regulatory conflict will ultimately determine whether South Korea embraces a banking-dominated stablecoin model or adopts a more diverse approach that includes non-bank financial institutions and technology companies. The outcome will shape the development of South Korea’s digital asset market for years to come, influencing everything from payment systems to decentralized finance applications built on won-denominated stable assets.