Stablecoin Regulation Splits Korea's Financial Watchdogs, Delaying Digital Asset Framework

South Korea’s push to modernize its digital asset laws has hit a roadblock, with regulators deadlocked over stablecoin governance. The Bank of Korea and the Financial Services Commission are locked in a fundamental dispute about who should issue stablecoins and how strictly they should be controlled. This regulatory standoff has forced the government to postpone its comprehensive digital asset bill, pushing the legislative timeline well into 2026. The clash reveals a deeper tension between financial stability advocates and those prioritizing innovation in the crypto space.

Central Bank vs. Financial Commission: The Stablecoin Issuance Battle

The core disagreement centers on stablecoin control. South Korea’s central bank wants to limit issuance to bank-led consortia, arguing that majority bank ownership strengthens overall financial stability. This approach would effectively gate-keep the market, keeping non-traditional players out. However, the Financial Services Commission opposes this framework, warning that such restrictions could unfairly limit competition and hinder the growth of the technology sector. The commission views rigid thresholds as unnecessarily constraining for innovation.

Beyond issuance rights, the two agencies also clash over the licensing structure itself. The Bank of Korea has proposed establishing a new oversight committee specifically for approvals, while the Financial Services Commission insists its existing structure—which already includes financial authorities—is sufficient. This bureaucratic friction has become another sticking point in finalizing the rulebook.

How New Stablecoin Rules Would Protect Users

Regardless of the issuer debate, both regulators agree on one principle: stablecoins must maintain full reserves. Under the proposed framework, all stablecoin issuers would be required to hold reserve assets—either in deposits or government bonds—equal to their token supply. These reserves would be held in custody by approved guardians, ensuring users cannot lose funds due to issuer insolvency. The approach mirrors best practices from traditional banking sectors.

The regulatory push extends beyond stablecoin reserves. South Korea is drafting expanded compliance standards for all digital asset operators, raising the bar for disclosure and advertising requirements. Service providers now face strict liability for operational failures, including losses from hacking or platform outages. Critically, the new rules remove fault-based exemptions, meaning platforms cannot escape responsibility by claiming they tried their best. This shift signals the government’s determination to impose institutional-grade accountability across the sector.

Token Fundraising May Finally Reopen to Domestic Startups

One of the bill’s more progressive provisions could restore domestic token fundraising—a market that has been largely frozen since 2017. South Korea implemented a sweeping ban on Initial Coin Offerings after market abuse scandals, but regulators now recognize that outright prohibition has also stifled legitimate innovation. The reformed approach would allow controlled token issuance under strict disclosure and vetting procedures, giving startups a regulated pathway to capital while protecting investors from manipulation and fraud. This represents a significant philosophical shift from earlier blanket prohibitions.

Regulatory Alignment Needed Before 2026 Becomes Decisive

Both the ruling party and opposition lawmakers are preparing rival proposals as political will builds behind digital asset regulation. The government continues internal technical reviews while various parliamentary groups work to consolidate past bills into unified frameworks. Regulators remain focused on resolving structural disagreements over stablecoin oversight before submitting the main bill to parliament.

The timeline reflects Seoul’s broader strategy: phase one targeted market abuse, and phase two now focuses on structural safety and robust oversight of asset issuance. Officials expect further negotiations will determine whether stablecoin rules favor traditional finance or accommodate emerging players. The delay, while frustrating for the crypto community, suggests policymakers are taking seriously the stakes of getting these rules right rather than rushing flawed legislation. Regulatory consensus remains the prerequisite for moving forward into 2026.