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South Korea delays digital asset law as stablecoin disputes persist

Written by Isaac FrancisPublished Dec. 30 2025Last Updated Dec. 30 2025

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South Korea’s push to introduce a comprehensive regulatory framework for digital assets has been delayed, with the proposed Digital Asset Basic Act now postponed until 2026.

The delay is largely attributed to unresolved disagreements among domestic regulators over which institutions should be permitted to issue stablecoins.

Regulatory bodies remain divided on whether stablecoin issuance should be limited mainly to banks or opened to a wider group of fintech participants.

The Financial Services Commission has proposed strict safeguards aimed at strengthening investor protection and market confidence.

Draft provisions would require stablecoin issuers to hold reserves only in low-risk assets such as bank deposits or government bonds.

Issuers would also be required to place 100% of reserves under the custody of independent custodians, typically commercial banks.

Regulators say this structure is designed to be bankruptcy-remote, protecting users if an issuer were to collapse.

The approach reflects lessons drawn from previous global failures within the digital asset sector.

Beyond stablecoins, the bill seeks to apply traditional financial standards to cryptocurrency platforms and service providers.

Digital asset firms would face enhanced disclosure obligations, clearer terms of service, and tighter controls on advertising.

Operators could be held strictly liable for user losses resulting from security breaches or operational failures.

This liability standard would apply even in cases where negligence cannot be directly proven.

The framework mirrors protections already in place within South Korea’s e-commerce sector.

The proposed law also signals a potential policy shift by allowing regulated domestic token sales.

South Korea has banned initial coin offerings since 2017, pushing many local projects to raise funds overseas.

Under the new plan, compliant Korean projects could conduct ICOs if they meet transparency and risk management requirements.

Despite these measures, disagreement between the Financial Services Commission and the Bank of Korea continues to stall progress.

Officials remain split over whether banks should hold majority control in stablecoin consortia.

Others argue broader participation could better support innovation in the domestic crypto industry.

The stalemate highlights ongoing tensions between financial stability and technological advancement.

As other jurisdictions move ahead with stablecoin rules, South Korea’s delay creates uncertainty for market participants.

The ruling party is reportedly preparing an alternative bill to consolidate competing proposals.

Policymakers say any final framework will prioritise consumer safeguards and systemic stability.

Investors and businesses are now awaiting clarity that could shape South Korea’s role in the global crypto economy.