South Korea wants local firms to issue won-backed stablecoins under strict rules set by the new crypto law.
The Financial Services Commission will approve stablecoin issuers and oversee all digital asset activity.
Crypto use is rising fast in South Korea with over 18 million users and stablecoin trade hitting ₩57 trillion.
South Korea is moving quickly to regulate its digital asset sector. Just days after President Lee Jae-myung’s inauguration, the ruling Democratic Party has submitted a new bill.
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The proposed Digital Asset Basic Act outlines a framework for issuing stablecoins and regulating the broader crypto industry. The move fulfills a key campaign promise by President Lee.
Stablecoin Licensing Framework Introduced
Under the bill, domestic firms can issue stablecoins backed by the Korean won. These issuers must hold at least ₩500 million in capital. They also need approval from the Financial Services Commission.
Companies must set up safeguards for reserve management and bankruptcy protection. These steps aim to protect user assets in case of insolvency. The legislation targets stability in South Korea’s digital markets. It builds on the Virtual Asset Investor Protection Act, which became law in July 2024.
Strong Oversight Measures Proposed
The new bill creates stronger oversight for all digital asset activities. It introduces licensing, approval, and reporting requirements for crypto companies.
A Digital Asset Committee will operate under the President’s office. Its role will be to coordinate national policy on digital assets. Another group, the Digital Asset Industry Association, will monitor market practices.
This association will also assess which tokens can be listed on local exchanges. Subcommittees will handle individual listing reviews. The Financial Services Commission gains new authority under the proposal. It will be allowed to investigate and penalize unfair trading activities.
Surging Market Activity and Political Momentum
The push for regulation comes amid rising stablecoin use in South Korea. Transactions involving US dollar stablecoins totaled ₩57 trillion in Q1 2025.
Crypto participation in the country remains high. Around 18 million people, over one-third of the population, are active in digital asset markets. President Lee won the snap election on June 3 with over 49% of the vote. His campaign focused on expanding digital asset adoption and regulatory clarity.
Crypto Policies Fuel Market Reaction
Lee’s stance has driven market gains in crypto-related stocks. KakaoPay, a digital wallet provider, surged 45% in five days. Analysts have raised concerns, noting that policy outcomes remain uncertain. Still, momentum in the sector continues.
The central bank has expressed caution. It warned that non-bank stablecoins may weaken monetary policy control. Despite past market failures like the Terra collapse, the administration is pressing ahead. The new bill signals a clear commitment to developing a domestic crypto framework.
