South Korea stablecoin framework stalls as regulators split over banks role

In South Korea, the development of a regulatory framework for locally issued stablecoins is currently at a standstill. This delay is primarily due to disagreements among regulators and the Bank of Korea regarding the extent of banks' involvement in the issuance of won-backed stablecoins. As the year draws to a close, it appears unlikely that South Korea will finalize a stablecoin framework, which many had anticipated for 2025.

Regulators divided over banks' role in stablecoin issuance

The Bank of Korea (BOK) has been at odds with other financial regulators over how much influence banks should have in the creation of stablecoins tied to the Korean won. The BOK asserts that any stablecoin issuer must be primarily owned by a consortium of banks, holding at least 51% of the entity. In contrast, other regulators are more supportive of a broader range of players being involved in stablecoin issuance.

A BOK official emphasized that banks, given their regulatory oversight and extensive experience with anti-money laundering protocols, are in the best position to lead in the stablecoin space. The central bank believes that allowing banks to take a dominant role would help minimize risks to the financial system and maintain foreign exchange stability.

Banks should lead stablecoin issuance to mitigate financial risks

The BOK has raised concerns that permitting non-bank entities to issue stablecoins could undermine existing regulations that prevent industrial firms from owning financial institutions. This is particularly relevant because stablecoins operate similarly to deposit-taking instruments, where they gather funds from users.

In a recent study, the BOK highlighted that allowing non-bank companies to issue stablecoins would be akin to allowing them to engage in narrow banking, which involves issuing currency while providing payment services. The central bank is wary that technology firms issuing stablecoins could create monopolistic scenarios.

Proposed legislation on stablecoin issuance is currently under review

In October, the Financial Services Commission (FSC) was expected to present a regulatory framework for won-backed stablecoins as part of a government initiative. However, the National Assembly’s Political Affairs Committee is now reviewing three different bills concerning stablecoin issuance, submitted by lawmakers from both the ruling and opposition parties.

All three proposed bills require a minimum capital of 5 billion won (approximately $3.4 million) for stablecoin issuers. However, there are still contentious issues, including whether these issuers should be allowed to provide interest on stablecoin holdings. Some bills permit interest payments, while others propose restrictions against them.

Local tech giants are accelerating stablecoin initiatives amid delays

As the South Korean government grapples with the regulatory framework for stablecoins, local technology companies are moving ahead with their own initiatives. Notably, Naver is poised to launch a stablecoin wallet in collaboration with Hashed and the Busan Digital Exchange next month. This effort comes amid a potential merger with Dunamu, the operator of the major cryptocurrency exchange Upbit.

The BOK's call for banks to play a leading role in stablecoin issuance reflects its earlier statements. In June 2025, the Deputy Governor of the BOK suggested that banks should be the primary issuers of stablecoins. Additionally, several major South Korean banks are reportedly collaborating to launch a won-pegged stablecoin by 2026, indicating a strong interest from the banking sector in this emerging market.

As discussions continue and local tech firms push forward with their projects, the future of stablecoins in South Korea remains uncertain but dynamic. The ongoing debates among regulators and the proactive steps taken by the private sector could shape the landscape of digital currencies in the region.