South Korea’s Stablecoin Bill Hits a Wall as Regulators Clash Over Control

Core Insights - South Korea's stablecoin regulations have been postponed until 2026, delaying the implementation of the Digital Asset Basic Act, which is part of a broader digital asset framework [1][7] Regulatory Framework - The Digital Asset Basic Act aims to establish rules for stablecoin issuance, including licensing, reserve management, and investor protections, building on the Virtual Asset User Protection Act enacted in 2023-2024 [2] - The proposed bill mandates that stablecoin issuers hold 100% reserves in safe assets, such as bank deposits or government bonds, with full custody by banks [6][7] Regulatory Deadlock - The primary cause of the delay is a deadlock between the Financial Services Commission (FSC) and the Bank of Korea (BOK), with the FSC advocating for a flexible approach to foster innovation, while the BOK emphasizes financial stability and stricter controls [3][7] - The BOK insists that stablecoin issuers operate as consortia with banks holding at least 51% ownership, citing the need for supervision and anti-money-laundering controls [4] - Disagreements extend to reserve requirements, enforcement authority, supervisory jurisdiction, and the permissibility of interest-bearing stablecoins [5] Industry Impact - The delay in regulations risks slower growth in the crypto sector amid the dominance of foreign stablecoins, although private sector activity continues, with major banks exploring consortia for won-pegged stablecoins targeting launches in 2026 [7][8]