South Korea’s much-anticipated Digital Asset Basic Act (DABA), a comprehensive framework intended to govern the trading and issuance of cryptocurrencies in one of Asia’s most active digital asset markets, has been delayed due to disagreements among regulators over the issuance of stablecoins.
The biggest disagreement is over who should have the legal authority to issue KRW-pegged stablecoins, according to an article in the Korea Tech Desk. The Bank of Korea (BOK) has argued that only banks with a majority stake (51%) should be allowed to issue stablecoins. It states that financial institutions are already subject to strict solvency and anti-money laundering requirements and are therefore the only ones that can guarantee stability and protect the financial system.
The Financial Services Commission (FSC), which oversees financial policymaking, is more flexible. He acknowledged the need for stability, but warned that a “strict 51% rule” could stifle competition and innovation, preventing fintech companies with the technical expertise needed to build scalable blockchain infrastructure from participating, according to the report.
The FSC cited European Union regulations on crypto-asset markets, in which most licensed stablecoin issuers are digital asset companies rather than banks. He also cited fintech-led yen stablecoin projects in Japan as an example of regulated innovation.
The standoff highlights a broader global debate over whether banks or fintech companies should control stablecoins backed by fiat currencies, a decision that could shape competition, innovation and monetary oversight.
The ruling Democratic Party of Korea (DPK) also opposes the BOK’s 51 percent rule, a Korea Times report reported last week.
“A majority of participating experts expressed concerns about the BOK proposal, and many question whether such a framework could bring innovation or generate strong network effects,” said DPK lawmaker Ahn Do-geol. “It is also difficult to find global legislative precedents in which institutions in a specific sector are required to hold a 51% stake. »
He said the BOK’s stability concerns could be alleviated through regulatory and technological measures, a view that, the lawmaker added, “is widely shared among policy advisors.”
Foreign-issued stablecoins are also another key sticking point. According to an earlier version of the government proposal prepared by the FSC, foreign-issued stablecoins would be allowed in South Korea if they are licensed and have a branch or subsidiary in the country. This would require issuers such as Circle, which issues USDC, the world’s second-largest stablecoin, to establish a local presence for the token to be used legally in the country.
The regulatory impasse is expected to delay passage of the bill until at least January, with full implementation now unlikely before 2026, according to AInvest. South Korea’s digital assets law marks a significant change in a country that banned crypto for nine years, a stance its financial watchdog began relaxing earlier this year.
