Delayed legislation, inter-agency conflict, and central bank resistance leave Korea’s won stablecoin plans in limbo
South Korea’s push to establish a legal framework for won-pegged stablecoins has suffered another setback after the country’s top financial regulator failed to meet a government deadline. Earlier this month, the ruling Democratic Party asked key ministries and the Financial Services Commission (FSC) to submit a draft regulatory framework for stablecoins by December 10, as part of broader reforms to modernize the country’s digital asset sector.
The FSC’s failure to deliver the so-called second-phase virtual asset bill to the National Assembly has prolonged uncertainty for market participants. The delay comes at a sensitive moment, as political divisions deepen over how stablecoins should be structured and who should control them. At the center of the dispute is a growing clash between the Democratic Party and the Bank of Korea (BOK), raising questions about whether South Korea can move quickly enough to remain competitive in the global digital finance race.
FSC Misses Deadline, Cites Need for Coordination
The FSC has acknowledged that it did not meet the ruling party’s timeline. According to local media outlet Newsis, the regulator now plans to “soon make public” its own proposal, tentatively titled the Basic Digital Asset Act, rather than submitting a draft by the requested deadline.
“We were unable to submit a proposal within the requested timeframe,” an FSC spokesperson told reporters. “The simple fact is that the FSC needed more time to coordinate its position with the relevant agencies.”
Instead of releasing a draft in advance, the FSC said it intends to announce its proposal at the same time it formally submits the bill to the National Assembly. The regulator said this approach is meant “to protect the public’s right to know,” even if it means further delays in the legislative process.
Political Pressure Builds as Promises Mount
The delay has increased pressure on the ruling Democratic Party, which has repeatedly pledged to legalize stablecoins as part of President Lee Jae-myung’s campaign commitments. Party officials have said they aim to introduce stablecoin legislation by the end of January 2026, but the absence of a unified government proposal has made that timeline increasingly uncertain.
For the private sector, the wait continues. All forms of cryptocurrency and stablecoin issuance remain illegal in South Korea, preventing companies from launching won-pegged tokens. Policymakers argue that legalizing stablecoins is necessary to help domestic firms compete with counterparts in the United States and Japan, where clearer regulatory regimes are already in place.
A Deepening Rift With the Central Bank
The legislative delay cannot be separated from rising tensions between the government and the Bank of Korea. The central bank has openly criticized the ruling party’s stablecoin plans, warning that allowing large technology firms to issue their own digital currencies could weaken monetary policy control and threaten financial stability.
These objections have triggered strong reactions from government officials, leaving the FSC caught between political leadership and the central bank’s authority. The disagreement has evolved into a broader debate about who should control digital currency issuance in South Korea.
The Core Dispute: Who Gets to Issue Stablecoins?
One proposal, reportedly supported by the BOK, would limit stablecoin issuance to consortiums in which domestic banks hold at least a 51% ownership stake. The central bank argues that bank-led models would ensure stronger reserve management, better compliance with anti-money laundering rules, and greater protection for monetary policy.
The FSC has pushed back against this approach, saying it would create high entry barriers and limit innovation. The regulator has pointed to the European Union and Japan as examples where most stablecoin issuers are fintech companies rather than traditional banks, arguing that there are few global precedents for strict bank-dominated issuance models.
Oversight and Veto Powers Add to the Standoff
Disagreements extend beyond who can issue stablecoins to who should oversee them. The BOK has sought veto rights over stablecoin approvals, along with broader regulatory powers, including the ability to conduct spot inspections of issuers.
The FSC has rejected these demands, stating that its own approval process should be sufficient. The regulator has argued that granting the central bank such authority would be excessive and could complicate an already fragmented regulatory environment.
What Comes Next for Korea’s Stablecoin Policy?
With the FSC and the BOK unable to resolve their differences, lawmakers are increasingly considering moving forward without a unified government proposal. The National Assembly may now review lawmaker-initiated bills that were previously submitted, bypassing the stalled inter-agency process.
While this could restart formal discussions, it also introduces new uncertainty. Whether South Korea can pass comprehensive stablecoin legislation during an extraordinary session in early 2026 remains unclear. Until then, the country’s digital asset industry is likely to remain in regulatory limbo, watching closely as political compromise—or further conflict—shapes the future of the won stablecoin.
