Key takeaways
Korea’s crypto invoice is stalled over stablecoin issuer guidelines.
The central financial institution desires banks to stay in management, typically framed as a “51%” threshold.
Regulators and lawmakers concern a bank-only mannequin would restrict competitors.
Corporations are lining up, with Toss planning a won-backed stablecoin as soon as the foundations are finalized.
South Korea’s subsequent main crypto legislation is being held up by a seemingly easy query: Who will get to challenge a won-backed stablecoin?
The proposed Digital Asset Fundamental Act has slowed as regulators conflict over whether or not stablecoins must be handled as bank-like cash or as a licensed digital-asset product.
On the middle is the Financial institution of Korea’s push for a “banks-first” mannequin, ideally via bank-led consortia with no less than 51% financial institution possession, arguing that stablecoins might, of their view, spill over into financial coverage, capital flows and monetary stability in the event that they scale too shortly.
The Monetary Companies Fee and lawmakers, in the meantime, are cautious {that a} bank-dominated regime might materially restrict competitors and sluggish innovation.
The standoff is now anticipated to push the invoice into 2026.
Why Korea cares about won-stablecoins
Stablecoins in South Korea are already vital to native merchants who transfer worth into crypto markets, typically by way of dollar-pegged tokens to entry offshore liquidity. If stablecoin makes use of scales, it might amplify cross-border flows and complicate foreign-exchange administration, particularly in a market the place crypto participation and retail publicity are unusually excessive.
That’s the reason the Financial institution of Korea continues to border issuer guidelines as a “monetary stability” resolution. Officers argue {that a} cautious, staged rollout, beginning with tightly regulated banks, reduces the chance of sudden outflows or a lack of management over how “personal cash” circulates.
On the identical time, policymakers who need extra firms to be allowed to challenge won-backed stablecoins view the difficulty as certainly one of competitiveness. If Korea doesn’t construct a trusted native possibility, customers will proceed to depend on overseas stablecoins, leaving the nation with much less regulatory visibility and fewer alternatives to develop a home stablecoin {industry}.
Do you know? Within the 12 months via June 2025, stablecoin purchases denominated in Korean received totaled about $64 billion in South Korea, in keeping with Chainalysis.
The regulatory backdrop
South Korea’s first main crypto regulator act was the Act on the Safety of Digital Asset Customers. It’s constructed round market security, together with the segregation and custody of buyer funds, with banks designated as custodians for person deposits. The framework additionally mandates cold-wallet storage, legal penalties for unfair buying and selling and insurance coverage or reserve necessities to cowl hacks and system failures.
Nevertheless, that “part 1” framework is especially targeted on how exchanges and repair suppliers shield customers. The unresolved dispute lies within the subsequent step, the proposed Digital Asset Fundamental Act, the place lawmakers and regulators intention to outline stablecoin issuance, supervision and issuer eligibility.
That is exactly the place the invoice is bogging down. When Korea tries to reply the query of who can challenge stablecoins, the Financial institution of Korea and the monetary regulator diverge.
Do you know? South Korea’s crypto guidelines require licensed service suppliers to maintain no less than 80% of buyer belongings in offline chilly wallets to guard in opposition to hacks and theft.
Three establishments, three incentives
South Korea’s stablecoin standoff is in the end a dispute over which establishment ought to have main duty when personal cash turns into systemically vital.
The Financial institution of Korea is approaching won-backed stablecoins as a possible extension of the funds system and, subsequently, as a financial coverage and monetary stability challenge. Its senior management has argued for a gradual rollout that begins with tightly regulated industrial banks and solely later expands to the broader monetary sector to cut back the chance of disruptive capital flows and knock-on results during times of market stress.
The Monetary Companies Fee views the identical product as a regulated monetary innovation that may be supervised via licensing, disclosure, reserve requirements and ongoing enforcement, with out hard-wiring the market to banks because the default winners.
That’s the reason the FSC has pushed again in opposition to the concept that issuer eligibility must be decided primarily by possession construction and why leaked and proposed approaches have reportedly examined a number of fashions reasonably than treating financial institution management as the one secure possibility.
Then there are lawmakers and social gathering activity forces, who’re weighing political guarantees, {industry} stress and the optics of competitiveness.
Some proposals have contemplated comparatively low capital thresholds for issuers, which the central financial institution has described as growing instability dangers. Others argue {that a} bank-first regime might merely delay product market match and push exercise in the direction of offshore greenback stablecoins.
Even the “51% rule” debate has an area twist. The Financial institution of Korea has warned that permitting non-bank firms to take the lead might collide with Korea’s long-standing separation between industrial and monetary capital.
Do you know? Main Korean exchanges reminiscent of Bithumb and Coinone added USDT/KRW buying and selling pairs beginning in December 2023, making stablecoins simpler to entry immediately with the received.
The “51% rule”: What it’s, why it exists and why it is controversial
In its strictest type, the Korean media-dubbed “51% rule” suggests {that a} won-backed stablecoin issuer must be a consortium led by industrial banks, with banks holding no less than a 51% possession stake. This construction would successfully be certain that banks management governance, threat administration and, crucially, redemption operations.
The logic is that if stablecoins begin functioning like cash at scale, they will affect financial coverage transmission, capital flows and monetary stability. A bank-led construction is meant to import prudential self-discipline from day one, together with capital requirements, supervisory tradition, Anti-Cash Laundering (AML) controls and disaster administration, reasonably than trying to bolt these safeguards on after a non-bank issuer has already reached systemic dimension.
The opposition is simply as direct. The Monetary Companies Fee and pro-industry lawmakers argue that hard-wiring financial institution management into the foundations might scale back competitors, sluggish experimentation and successfully shut out succesful fintech or funds corporations that may ship higher distribution and person expertise.
Critics additionally level out that necessary possession thresholds are an oblique method to regulate threat and never the one one, given the supply of reserve necessities, audits, redemption guidelines and supervisory powers.
It is not nearly who points stablecoins
Even when South Korea in the end permits non-banks to challenge won-backed stablecoins, regulators nonetheless have loads of levers to stop the product from exhibiting shadow-bank-like threat traits.
The federal government’s draft strategy has targeted on reserve high quality and segregation, steering issuers in the direction of extremely liquid, low-risk backing reminiscent of financial institution deposits and authorities debt. Reserves can be held via third-party custody and structurally separated from the issuer to cut back chapter spillover.
Then there’s the “money-like” precept of fast redemption at par. Publicly mentioned proposals embrace clear redemption guidelines and tight timelines, that are designed to stop a stablecoin from turning right into a gated fund during times of market stress.
Korea’s broader regulatory posture already factors on this path. The Monetary Companies Fee has been building a user-protection regime round custody requirements and strict operational necessities, reminiscent of offline storage thresholds for buyer belongings, displaying that regulators are snug setting concrete technical guardrails reasonably than relying solely on licensing choices.
Business stress and what to look at in 2026
There’s urgency. The regulatory standoff is unfolding whereas the market is already making ready for won-backed stablecoins.
Main industrial banks are gearing up for a bank-led mannequin, whereas giant shopper platforms and crypto-native gamers are exploring how they might challenge or distribute a won-pegged token if the foundations permit it. A number of banks and main firms are reported positioning for this market even because the political debate drags on.
Fintech corporations, nevertheless, don’t need to function inside a bank-controlled consortium. Toss is a transparent instance. The corporate has mentioned it’s preparing to challenge a won-based stablecoin as soon as a regulatory framework is in place, treating laws because the gate that determines whether or not the product can launch.
This push and pull is why delays matter. The longer Korea debates issuer eligibility, the extra on a regular basis stablecoin exercise defaults to offshore, dollar-based infrastructure, and the tougher it turns into to argue that the sluggish tempo displays a deliberate selection reasonably than misplaced time.
So, what occurs in 2026? Eventualities into account embrace:
Staged licensing, with banks first and broader participation later, is an strategy the Financial institution of Korea has publicly supported.
Open licensing with a “systemic” tier, the place bigger issuers face heavier necessities.
Financial institution-led consortia which are allowed however not necessary, easing the battle over the “51% rule.”
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