South Korea\u2019s long-awaited Digital Asset Basic Act (DABA), a sweeping framework meant to govern crypto trading and issuance in one of Asia\u2019s most active digital asset markets, has been delayed amid disagreements among regulators over stablecoin issuance.<\/p>\n
The most significant disagreement centers on who should have the legal authority to issue KRW-pegged stablecoins, according to a Korea Tech Desk article. The Bank of Korea (BOK) argued that only banks with majority (51%) ownership should be permitted to issue stablecoins. It said financial institutions are already subject to stringent solvency and anti-money-laundering requirements and therefore the only ones in position to ensure stability and protect the financial system.<\/p>\n
The Financial Services Commission (FSC), which oversees financial policy-making, is more flexible. It acknowledged the need for stability, but warned that a strict \u201c51% rule\u201d could stifle competition and innovation, blocking fintech firms with the technical expertise to build scalable blockchain infrastructure from participating, according to the report.<\/p>\n
The FSC cited the European Union’s Markets in Crypto-Assets regulation, in which most licensed stablecoin issuers are digital asset firms rather than banks. It also pointed to Japan\u2019s fintech-led yen stablecoin projects as an example of regulated innovation.<\/p>\n
The deadlock highlights a broader global debate over whether banks or fintech firms should control fiat-backed stablecoins, a decision that could shape competition, innovation and monetary oversight.<\/p>\n
The ruling Democratic Party of Korea (DPK) also opposes the BOK\u2019s 51% rule, a Korea Times article reported last week.<\/p>\n
\u201cA majority of participating experts voiced concerns about the BOK\u2019s proposal, with many questioning whether such a framework could deliver innovation or generate strong network effects,\u201d DPK lawmaker Ahn Do-geol said. \u201cIt is also hard to find global legislative precedents in which institutions from a specific sector are required to hold a 51%.\u201d<\/p>\n
He said the BOK\u2019s stability concerns could be mitigated through regulatory and technological measures, a view the lawmaker added, \u201cis broadly shared among policy advisors\u201d.<\/p>\n
Foreign-issued stablecoins are also another key sticking point. According to an earlier draft of the government proposal prepared by the FSC, foreign-issued stablecoins would be allowed in South Korea if they are licensed and have a branch or subsidiary in the country. That would require issuers such as Circle, which issues USDC, the world\u2019s second-largest stablecoin, to establish a local presence for the token to be legally used in the country.<\/p>\n
The regulatory deadlock is expected to delay the bill\u2019s passage until at least January, with full implementation now unlikely before 2026, according to AInvest. South Korea\u2019s digital assets act marks a significant shift in a country that for nine years banned crypto, a stance that its financial watchdog began to soften earlier this year.<\/p>\n","protected":false},"excerpt":{"rendered":"
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