South Korea’s ambitious plan to legalize won-pegged stablecoins has suffered a significant setback after missing a government-imposed deadline. The Financial Services Commission (FSC) failed to submit the draft stablecoin legislation by December 10, exposing a deep power struggle among authorities over who should control the next phase of digital finance. A regulator spokesperson confirmed they need additional coordination before making the government’s position public.
The dispute has prevented the fulfillment of President Lee Jae-myung’s campaign pledge to establish a robust legal framework for digital assets before the year’s end. The ruling Democratic Party had explicitly requested the delivery of the bill to begin its processing, but the lack of internal consensus has paralyzed the administrative process. Now, officials expect to release the proposal titled “Basic Digital Asset Act” late this month or early January 2026.
This administrative delay is not a simple bureaucratic issue, but a symptom of a fundamental disconnect between traditional monetary vision and technological innovation. The FSC argues its approach must align with international standards, while trying to mediate in an environment where political urgency clashes head-on with institutional caution. The situation has forced lawmakers to consider reviewing multiple competing drafts at the National Assembly.
Who Will Control Digital Issuance in the Korean Financial Future?
The core of the stalemate lies in an unresolved dispute between the FSC and the Bank of Korea (BOK) regarding issuance jurisdiction. The central bank firmly maintains that stablecoins function similarly to currency and deposits, and thus must remain under strict banking control. The BOK is pushing to require domestic banks to hold at least 51% of any issuing entity, in addition to claiming inspection powers and veto rights over approvals.
Conversely, the FSC resists this restrictive approach, pointing out that it lacks global precedents and could stifle local innovation. Financial regulators highlight that under the European Union’s MiCA framework, most issuers are non-bank digital asset firms. Japan also allows fintech companies to issue stablecoins, a model the FSC considers more appropriate to foster technological competition without compromising financial stability.
Current negotiations suggest a possible compromise could involve flexible ownership thresholds based on business scope, though no definitive agreement has been confirmed. This regulatory uncertainty keeps technology firms in limbo, watching as their international competitors advance while the South Korean internal debate drags on indefinitely.
Can the Industry Keep Pace Without a Clear Framework?
While regulators argue, industry groups warn that South Korea risks falling behind jurisdictions like the United States and the European Union. Domestic issuance remains illegal, even though companies like Naver Financial have already developed blockchain wallets for local programs. Likewise, KakaoBank has begun work on a won-denominated digital token, anticipating an opening that has yet to arrive.
The urgency for clear regulation has been exacerbated by recent enforcement challenges, such as the Upbit hack. Authorities revealed that Binance only froze a small portion of the stolen funds, evidencing the difficulty of coordinating rapid responses without transparent oversight frameworks. Experts point out that these incidents demonstrate the imperative need for structured controls that go beyond current bans and allow for effective action.
Finally, this stablecoin debate unfolds against a backdrop of delayed crypto policy more broadly. The country’s virtual asset tax regime, initially approved in 2020, has suffered multiple postponements and is now scheduled for 2027. The industry hopes the consolidated bill promised for January 2026 will finally manage to balance banking security with necessary technological innovation.
