South Korean lawmakers are accelerating work on a new korean stablecoin framework as part of a wider push to regulate digital assets and exchanges.
Summary
How is South Korea designing its new stablecoin framework?
South Korea’s ruling and opposition parties have reached a breakthrough agreement on a stablecoin regulation blueprint, setting the stage for a comprehensive Digital Asset Basic Act. According to the Maeil Business Newspaper, lawmakers aim to approve the full law by January 2026, marking a pivotal shift in the country’s crypto oversight.
The draft introduces a so-called “Korean-style stablecoin” built on a consortium structure. Under this model, banks must hold at least 51% equity, ensuring they retain majority control. Moreover, technology companies can participate as minority stakeholders, bringing innovation into a framework anchored by traditional financial institutions.
The deadline for submitting government proposals was set for December 10 by Democratic Party Representative Kang Jun-hyeon. However, Kang warned that if financial authorities fail to meet that deadline, lawmakers will move ahead with an independent version of the bill crafted in parliament.
How does the consortium model balance banks and fintechs?
On November 1, a party-government council meeting focused on the details of the proposed consortium structure. Kang confirmed intensive discussions over the level of bank participation and equity requirements. Furthermore, the Democratic Party secretary urged swift consultations to narrow differences between the Bank of Korea, the Financial Services Commission (FSC), and the broader banking sector.
The model mandates a 51% majority equity stake for banks, which lawmakers argue guarantees stability and prudential soundness. It is also designed to address Bank of Korea concerns that privately issued stablecoins could threaten the country’s monetary sovereignty. At the same time, the FSC has stressed the importance of lowering entry barriers so that fintech firms and non-banking companies can join the ecosystem.
Kang’s office noted that negotiators sought a “contact point” that balances monetary policy stability with industrial innovation. The compromise followed months of delay and repeated rounds of talks. Throughout this period, the Bank of Korea consistently pushed for a bank-centered issuance model rather than one dominated by technology firms or foreign stablecoin issuers.
Professor Hyun Jung-hwan of Dongguk University characterized a bank-led issuance model as a safety-first solution. The former Bank of Korea official pointed out that banks already issue deposit currency, while full-scale stablecoin operations are more complex. Reserve requirements would need to exceed deposits, and rules preventing the use of reserves for loans would remove traditional margin incentives for lenders.
What is the legislative timeline for the Digital Asset Basic Act in South Korea?
Representative Kang also detailed the timetable for government draft bills. The lawmaker insisted the FSC submit a legislative proposal for the overall framework before December 10. If the agency misses that deadline, Kang said he will lead a legislative initiative through the National Policy Committee. Moreover, the government aims to complete the bill during the regular National Assembly session.
Officials are targeting passage of the bill during an extraordinary National Assembly session scheduled for January 2026. Kang argued that the expected large “market ripple effect” requires close coordination between the government and opposition parties through the end of January. To date, several related bills have already been introduced, including proposals from Representatives Kim Eun-hye, Ahn Dogul, and Min Byeong-deok.
Meanwhile, the slow pace of progress has turned coordination between the government and the ruling party into a critical watershed moment. A key meeting between financial authorities and political leaders took place behind closed doors at the National Assembly building in Yeouido, Seoul. That said, participants signaled that the talks made substantial headway.
Members of the Democratic Party’s political affairs committee met FSC officials to refine the direction of the new framework law. Immediately after the meeting, it was confirmed that the consortium format would formally incorporate positions from the central bank, the regulator, and the banking sector. Discussion progress was welcomed by market participants who had been waiting through extended delays.
Major jurisdictions including the United States, the European Union, and Japan have already completed their own stablecoin regulatory overhauls. As a result, South Korea is under growing pressure to finalize its framework and avoid regulatory lag.
How does the korean stablecoin framework interact with anti-money laundering rules?
In parallel with the stablecoin work, the FSC is tightening controls on cryptocurrency transactions and virtual asset providers. On November 28, South Korea announced the expansion of its travel rule to cover all transaction sizes, eliminating earlier exemptions. Previously, transfers under 1 million won were exempt, creating a loophole for “smurfing” through multiple sub-1 million won payments.
The exemption threshold, defined as anything below approximately $680, had enabled some market participants to evade monitoring by splitting transfers. The new rules introduce comprehensive surveillance regardless of transaction size. Furthermore, high-risk offshore exchanges may be blocked from serving South Korean users if they operate outside domestic regulations.
The FSC has determined that certain overseas jurisdictions and operators present elevated risk profiles. Such steps seek to prevent capital flight to non-compliant foreign platforms. At the same time, stricter requirements now apply to virtual asset service provider registration, with enhanced standards around financial reserves, internal controls, and compliance systems.
South Korea now demands robust operational infrastructure before licensing any exchange. The higher bar is intended to professionalize the local cryptocurrency trading sector. Moreover, the measures align with broader efforts sometimes described as FSC anti money laundering enhancements, designed to close gaps that could be exploited for illicit finance.
Professor Hyun has stressed that stronger supervision will be essential if major banks begin handling large volumes of stablecoins. As issuance scales, potential systemic risks rise, he warned, requiring active and ongoing regulatory monitoring. A permanent consultation channel between the FSC and the Bank of Korea has been suggested to manage reserve requirements and issuance limits.
What does this mean for South Korea’s crypto market outlook?
Market observers see the emerging stablecoin consortium model and broader crypto rules as a turning point for South Korea’s digital asset market. If implemented as planned, the framework could combine the stability of bank balance sheets with the innovation of fintech firms. However, the final outcome will depend on how strictly reserve rules and issuance caps are enforced.
With a January 2026 target for the Digital Asset Basic Act, authorities have set an ambitious but defined schedule. Over the coming months, coordination between lawmakers, the FSC, the Bank of Korea, and industry stakeholders will determine the detailed contours of South Korea’s stablecoin and digital asset regime.
In summary, the new legislation, the expanded travel rule, and the tightening of exchange licensing standards signal that South Korea is moving toward a more structured, bank-anchored crypto environment. The combination of stability-focused oversight and controlled innovation is expected to shape the country’s position in global digital finance over the next several years.
