South Korea’s Crypto Regulation Delayed as Stablecoin Rules Face Deadlock

Core Insights - South Korea's comprehensive crypto regulation has been postponed to 2026 due to disagreements over stablecoin issuance control [1][9] - The Financial Services Commission (FSC) is drafting a Digital Asset Basic Act aimed at enhancing investor protections and compliance standards [3][5] Regulatory Proposals - Regulators propose that stablecoin issuers must hold reserves entirely in bank deposits or government bonds, with 100% of these reserves entrusted to licensed custodians [4][5] - The bill aims to prevent spillover risks from poorly backed digital assets and raise compliance standards across the crypto sector [5] Liability and Fundraising - Firms could be held liable for damages in cases of hacks or outages, similar to online retail platforms, even without negligence [6] - The draft law may allow initial coin offerings (ICOs) for local projects that meet strict criteria, reversing a ban in place since 2017 [6] Points of Contention - The Bank of Korea advocates for stablecoin issuance to be limited to bank-controlled consortia with at least a 51% ownership stake to ensure monetary stability [7] - The FSC opposes a fixed ownership threshold, arguing it could hinder innovation by sidelining technology firms [8]