When South Korean President Lee Jae-myung took office in June, he proclaimed that he would "reclaim monetary sovereignty by using a stablecoin pegged to the won." However, as the year draws to a close , the Digital Assets Basic Law remains stalled in the National Assembly corridor, and South Korea's stablecoin blueprint is deadlocked.
The catalyst for the legal delay was the question of who has the right to issue currency. The Bank of Korea proposed a "51% majority stake" threshold, requiring stablecoin issuers to be majority-owned by banks to ensure anti-money laundering and financial stability. The Financial Services Commission, however, opposes bank monopolies and advocates that technology companies can also issue currency under strict reserve regulations. The two sides' refusal to compromise has prevented the ruling party from finalizing the bill this year, freezing the legislative process.
Survival Costs Under the Strictest Reserve Terms
Even if the draft passes next year, it will be one of the strictest versions globally. The text outlines a "100% reserve requirement," stipulating that the issuance must be backed by an equivalent amount of bank deposits or government bonds, requiring third-party bank custody and segregation, and strictly prohibiting interest payments to holders. The government also plans to establish digital trade barriers, requiring large foreign stablecoins to establish domestic branches and accept local regulation before providing payment services. The official goal is to safeguard financial sovereignty, but these high barriers increase the cost of bringing foreign capital and technology to the market.
Regulatory vacuum accelerates capital flight
The market won't wait for bureaucratic negotiations. Lacking compliant channels for stablecoins in the Korean won, approximately $115 billion flowed to overseas platforms this year. Blockchain payment plans by tech giants like Kakao and Naver have also been forced to a halt; traditional banks, due to unclear legal grounds, dare not conduct pilot programs. The news that Terraform Labs founder Do Kwon may return to South Korea to serve his 15-year sentence in the US has further reinforced the regulatory authorities' "better to be slow than to make a mistake" attitude.
A lose-lose situation due to missed window
The strong dollar brought about by the Trump administration has put considerable pressure on neighboring economies. South Korea originally had the opportunity to create new payment infrastructure through a stablecoin for the Korean won, thus diversifying its reliance on the dollar. However, with legislation delayed for at least a year, capital and technology are seeking other markets, and South Korea's position as an Asian crypto hub is slipping away. If the Banking and Financial Services Commission of Korea fails to integrate, South Korea may end up in a lose-lose situation in the digital finance race.
