South Korea's Stablecoin Deadline: Banks' Control or Fintech Freedom?

South Korean lawmakers have imposed a December 10 deadline for financial regulators to submit a draft stablecoin bill, signaling escalating pressure to resolve prolonged disputes over the role of banks in stablecoin issuance. According to the report, the ruling Democratic Party issued a "last-minute notice" to regulators, warning that independent legislative action would follow if the deadline is missed. Kang Joon-hyun, a key lawmaker, emphasized that the bill could be fast-tracked for review in an extraordinary National Assembly session in January 2026 if delivered on time as reports indicate. The Financial Services Commission (FSC) acknowledged ongoing discussions but clarified that no final decision has been made on whether banks must hold a majority stake in stablecoin issuers as stated by the FSC.

The core debate centers on balancing financial stability with innovation. The Bank of Korea advocates for banks to control at least 51% of stablecoin issuers, citing risks to monetary policy and anti-money laundering (AML) compliance. Conversely, the FSC and some lawmakers argue for a more inclusive model to foster fintech participation and innovation. This divide has stalled progress on a regulatory framework, with three competing bills under review in the National Assembly's Political Affairs Committee. The bills differ on issues like whether stablecoin issuers should offer interest on holdings, reflecting broader policy divergences as noted by analysts.

The urgency of the December 10 deadline is amplified by parallel regulatory developments. South Korea's AML crackdown on sub-$680 crypto transfers and new travel rule measures add pressure to finalize stablecoin oversight. Meanwhile, the FSC's push for lower barriers to fintech entry contrasts with the BOK's caution, creating a regulatory tug-of-war that risks delaying a framework into 2026.

Globally, stablecoin developments highlight cross-border implications. In the U.S., the Federal Reserve's Lael Brainard announced efforts to establish capital and diversification rules for stablecoin issuers under the Genius Act. Separately, Bastion partnered with Sony Bank to launch a U.S. dollar-backed stablecoin initiative, underscoring enterprise adoption trends. These moves illustrate the growing integration of stablecoins into traditional financial systems, even as regulatory clarity remains fragmented.

South Korea's stablecoin saga reflects a broader tension between preserving financial stability and embracing digital innovation. With USD-pegged stablecoin trading volumes in South Korea reaching 56.95 trillion won in early 2025, the government faces mounting demand for a framework that balances oversight with market growth. The December 10 deadline could force a resolution, either through compromise or unilateral legislative action, shaping the trajectory of KRW-pegged stablecoins and their role in the global crypto ecosystem.