BOK and FSC Deadlock Over Stablecoin Rules as Tech Firms Fill the Void

South Korea's legislative push for a stablecoin regulatory framework has intensified as lawmakers set a Dec. 10 deadline for regulators to submit a draft bill, warning of independent action if the target is missed. The Financial Services Commission (FSC) and Bank of Korea (BOK) remain entrenched in a months-long dispute over who should control stablecoin issuance, with the central bank insisting banks must hold a majority stake in any issuer to mitigate financial stability risks. This standoff has delayed a framework widely expected by late 2025, leaving South Korea's burgeoning stablecoin market in regulatory limbo as tech giants and banks race to fill the void.

The BOK's position, outlined in a recent stablecoin study, argues that banks—already subject to stringent anti-money laundering (AML) oversight—are best positioned to lead stablecoin initiatives. It warns that non-bank entities issuing stablecoins could undermine existing rules separating industrial and financial capital, liking such activities to "narrow banking" that simultaneously issues currency and provides payment services. The central bank has proposed a 51% equity stake for bank consortia in stablecoin issuers, a requirement met with resistance from the FSC, which cautions that such a mandate could stifle innovation and deter tech firms from participating.

The FSC, meanwhile, has emphasized the need for a diverse ecosystem, advocating for clearer rules over restrictive bank-centric models. It has rejected expanded emergency powers for the BOK, arguing that small-scale issuers pose limited systemic risks and that overlapping regulatory authority could confuse the market. This divergence has stalled legislative progress, with the National Assembly now reviewing three competing bills from the ruling Democratic Party and opposition People Power Party. While all propose a 5 billion won ($3.4 million) minimum capital requirement for issuers, disputes persist over whether stablecoins should offer interest to users—a feature the BOK views as a potential disruptor to traditional banking.

Despite the regulatory gridlock, private sector activity is surging. Tech giants like Naver and Kakao are accelerating stablecoin initiatives, with Naver Financial set to launch a won-pegged stablecoin wallet in collaboration with Hashed and the Busan Digital Exchange. Meanwhile, eight major South Korean banks have formed a consortium to develop a stablecoin by 2026. The BOK's recent alignment with this bank-led approach, following Vice Governor Ryu Sangdae's June 2025 call for banks to dominate issuance, underscores its commitment to a conservative, risk-averse model.

The stakes extend beyond domestic policy. South Korea's push to challenge dollar-dominated stablecoins like Tether and USD Coin has drawn global attention, with KakaoPay's 42 million members and NaverPay's 30 million users poised to drive mass adoption. President Lee Jae-myung has framed the initiative as critical to preserving monetary sovereignty, particularly as over 10 million South Koreans already hold digital assets. Yet the regulatory uncertainty risks fragmenting the market, with lawmakers threatening to bypass regulators if the Dec. 10 deadline is not met.

As the deadline looms, the outcome will shape not only South Korea's fintech landscape but also its ability to compete in the global digital economy. With banks, tech firms, and regulators locked in a high-stakes negotiation, the path forward remains unclear—leaving the fate of stablecoins in a race against time.