The submission of South Korea’s long-awaited crypto bill continues to face hurdles due to ongoing disagreements among regulatory agencies over stablecoin issuers’ policies.
South Korea’s Digital Assets Act Delayed
Local reports indicate that South Korea’s Second Phase of the Virtual Asset User Protection Act will experience delays as financial authorities remain at an impasse regarding stablecoin issuance legislation.
According to news sources, financial circuits and the National Assembly confirmed on December 30 that the core policies within the crypto framework have largely been defined. However, as these agencies clash, the final submission may be progressively pushed back.
Anticipated features of the Financial Services Commission (FSC)’s draft could include investor protection measures like no-fault liability for crypto asset operators and shields against bankruptcy risks for stablecoin issuers.
As part of these protective measures, stablecoin issuers are likely to be required to manage reserve assets through deposits and government bonds. Additionally, they may have to ensure that at least 100% of the issuance amount is secured with custodians such as banks.
The proposed bill could also mandate that crypto asset operators adhere to strict disclosure obligations, ensuring that terms and conditions are clearly defined. Furthermore, it may impose stringent liability on digital asset operators for any damages stemming from hacks or system failures in alignment with the Electronic Financial Transactions Act.
Despite these potential advancements, key issues remain unresolved. This uncertainty implies that the bill’s final submission deadline could be postponed to early 2026.
Stablecoin Issuance Dispute Continues
The ongoing dispute between the Financial Services Commission and the Bank of Korea (BOK) over the issuance of won-denominated stablecoins has become a significant barrier to progress. While the central bank insists that a consortium of banks should control at least 51% of any stablecoin issuer seeking approval in the nation, the FSC fears that such requirements could stifle participation from tech firms and impede market innovation.
This tension has been brewing for months. Initially expected to lead to legislation approval by the end of 2025, reports now suggest a possible delay following the FSC’s missed deadline to submit a comprehensive Digital Assets Act to the National Policy Committee.
The two financial authorities also disagree on initial capital requirements for stablecoin issuers, with suggestions ranging from 500 million to 25 billion won, as well as whether to decouple issuance from distribution functions at exchanges.
Recent statements from an FSC official highlight that discussions are ongoing as they aim to narrow their differing views with relevant agencies. At the same time, the ruling party’s Digital Asset Task Force appears to be preparing a bill of its own, drawing from various legislative proposals submitted by lawmakers.
With the government expected to announce its proposal early next month, the integrated bill’s final form must be submitted by January 2026. Stakeholders are keenly awaiting a resolution to this prolonged regulatory conundrum as the landscape of South Korea’s crypto market continues to evolve.
