South Korea’s long-awaited Digital Asset Basic Act (DABA), a comprehensive framework designed to govern cryptocurrency trading and issuance in one of Asia’s most active digital asset markets, has been delayed due to disagreements among regulators over stablecoin issuance.
According to an article by Korea Technology Station, the most important disagreement centers on who should have the legal authority to issue stablecoins pegged to the Korean won. The Bank of Korea (BOK) believes that only banks with a majority stake (51%) should be allowed to issue stablecoins. Financial institutions are already subject to strict solvency and anti-money laundering requirements and are therefore uniquely equipped to ensure stability and protect the financial system, the report said.
The Financial Services Commission (FSC), which oversees financial policymaking, is more flexible. The report said it recognized the need for stability but warned that a strict “51% rule” could stifle competition and innovation, preventing fintech companies with the technical expertise to build scalable blockchain infrastructure from participating.
The FSC cited the EU’s regulation of crypto-asset markets, where most licensed stablecoin issuers are digital asset companies rather than banks. It also pointed to Japan’s fintech-led yen stablecoin project as an example of regulated innovation.
The standoff highlights a broader global debate over whether banks or fintech companies should control fiat-backed stablecoins, a decision that could impact competition, innovation and currency regulation.
The ruling Democratic Party of North Korea (DPK) also opposes the South Korean central bank’s 51% rule, The Korea Times reported last week.
“Most experts at the meeting expressed concerns about the Bank of Korea’s proposal, and many questioned whether such a framework could bring about innovation or generate strong network effects,” said North Korean lawmaker Ahn Do-gyeol. “It is also difficult to find precedents in the world that require institutions in specific industries to hold 51% of the shares.”
He said the Bank of Korea’s stability concerns could be alleviated through regulatory and technical measures, a view “widely shared by policy advisers”, the lawmaker added.
Foreign-issued stablecoins are also another key sticking point. According to an early draft of the government proposal prepared by the FSC, foreign-issued stablecoins will be allowed to be issued in South Korea if they are licensed and have branches or subsidiaries in the country. This will require issuers such as Circle, which issues USDC, the world’s second-largest stablecoin, to establish local branches so that the token can be legally used in the country.
The regulatory impasse is expected to delay passage of the bill until at least January, with full implementation now unlikely before 2026, AInvest said. South Korea’s digital asset bill marks a major shift from the country’s nine-year ban on cryptocurrencies, a stance that the country’s financial regulator began softening earlier this year.
