South Korea’s Digital Asset Bill Hits Regulatory Gridlock: Stablecoin Issuer Battle Delays Crypto Framework

Seoul's push for a comprehensive crypto framework just slammed into a wall of bureaucratic infighting.

The Stalemate Over Stablecoins

Regulators can't agree on who gets to mint the digital cash. The Financial Services Commission wants strict, bank-like oversight for any entity issuing won-pegged stablecoins. The Financial Supervisory Service argues for a more flexible approach, fearing excessive rules could stifle innovation and push projects offshore. This fundamental clash—security versus growth—has left the landmark Digital Asset Basic Act in legislative limbo.

Why This Delay Matters

Every day without clear rules is a day of uncertainty for one of the world's most fervent crypto markets. Investors and builders are left operating in a gray zone, unsure which moves might suddenly become illegal. The delay blocks crucial protections for users and stalls South Korea's ambition to become a digital asset hub. Meanwhile, the market doesn't wait—decentralized protocols continue to evolve, often bypassing traditional gatekeepers entirely.

The Global Race Continues

While Korean agencies debate, other jurisdictions are moving. Clear regulations in places like Singapore and the EU are actively drawing capital and talent. South Korea's hesitation risks ceding its early-mover advantage, turning a potential leadership position into a game of catch-up. It's a classic case of regulatory perfection becoming the enemy of market progress.

The bill's fate now hinges on a political compromise that satisfies both watchdog agencies. Until then, the industry holds its breath, watching yet another government struggle to fit decentralized innovation into centralized boxes—a process about as smooth as teaching a blockchain to respect office hours.

TLDR

• Regulators clash over stablecoin control, delaying Korea’s next digital asset law
• BoK backs bank-led issuance as FSC warns limits could stifle fair competition
• Draft sets strict full-reserve rules and platform liability for failures
• Lawmakers craft rival proposals as market growth drives urgency for clarity
• Delay reflects tension between stability aims and innovation in token policy

South Korea pushed back its next digital asset bill after regulators failed to close key policy gaps. The government continued internal talks, yet the dispute over stablecoin issuers stalled the timeline. Officials expect further negotiation because major agencies support different approaches.

Stablecoin Rules Face Ongoing Regulatory Divide

South Korea prepared strict reserve rules for stablecoin issuers, and the plan requires full backing in deposits or government bonds. The approach aims to protect users from issuer collapse, and regulators want custodians to hold all reserve assets.  The rulebook remains unfinished because agencies disagree on who may issue stablecoins.

South Korea’s central bank supports allowing only bank-controlled consortia to issue these tokens, and it argues that majority bank ownership strengthens financial stability. Yet the Financial Services Commission rejects a fixed stake threshold, and it claims such limits may restrict technology sector growth. The divide continues as both sides defend their priorities.

South Korea also faces disagreement over licensing oversight, and the central bank seeks a new approval committee. The Financial Services Commission resists that idea and says its current structure already includes financial authorities. The conflict has delayed the government’s submission of the bill.

Expanded Compliance Standards Advance Despite Delays

South Korea drafted wider compliance standards for digital asset operators, and the plan raises disclosure and advertising requirements. It also imposes strict liability for service failures, and the rules mirror those applied in established financial sectors. Operators must strengthen user safeguards as part of a unified framework.

South Korea included measures addressing hacking risk, and the framework holds platforms responsible for damages during outages. This standard removes fault-based exemptions, and it expands accountability in the sector. As a result, authorities expect stronger operational discipline across digital finance.

South Korea may also restore domestic token fundraising under new rules, and past restrictions halted offerings in 2017. The draft allows controlled issuance with strict disclosures, and it aims to prevent market abuse. The bill marks a major shift from earlier prohibitions.

Political Timeline Pushed Back to 2026

South Korea extended the legislative timeline while internal talks remain active, and parties now consider separate proposals. Parliamentary groups prepare alternative paths, and they plan to merge past lawmaker bills. Regulators continue technical reviews across stablecoin and market rules.

South Korea shifted its expected completion into 2026, and the delay reflects unresolved structural issues. The ruling party plans its own draft, and it hopes to accelerate progress through unified recommendations. Still, agencies must settle differences before the government finalizes the main bill.

South Korea views the framework as part of its long-term digital finance policy, and the first phase already targeted market abuse. The second phase focuses on structural safety, and officials plan stronger oversight across asset issuance. Ultimately, the timing depends on regulatory alignment and consensus.