South Korea to Introduce Landmark Stablecoin Regulation Bill in October

South Korea is poised to introduce a landmark stablecoin regulation bill, marking a pivotal step in its digital finance strategy as major banks and tech firms prepare for a new era of collaboration. The legislation, expected to be submitted to the National Assembly in October, will establish a legal framework covering issuance, collateral management, and risk controls for stablecoins. This initiative aligns with the country’s broader digital asset strategy, which includes a second digital asset framework advocated by President Lee Jae Myung to strengthen monetary sovereignty and support the development of a locally pegged stablecoin market [1].

The Financial Services Commission (FSC) has been working closely with lawmakers, with reports indicating that the bill will integrate stablecoin regulations into the country’s evolving digital asset ecosystem. Park Min-kyu, a ruling party lawmaker, confirmed the FSC’s plans, highlighting the government’s commitment to structured oversight without stifling innovation [1].

Meanwhile, South Korea’s major banks, including KB Kookmin, Woori, Shinhan, and Hana, are reportedly in early discussions with Circle’s president, Heath Tarbert. The potential collaboration with the U.S. dollar-pegged stablecoin issuer could shape the trajectory of stablecoin adoption in the country. These talks reflect the growing interest among traditional financial institutions in leveraging stablecoins for cross-border payments and financial innovation [1].

Technology giants such as Naver and Kakao have also joined the conversation, advocating for a unified network that could enhance interoperability between banks and payment platforms. Their involvement underscores the convergence of traditional and digital finance in South Korea, as both sectors seek to redefine financial services through stablecoin-based solutions [1].

The regulatory landscape is not without its complexities. South Korea’s central bank has expressed caution, with Governor Lee Chang-yong emphasizing that the issuance of won-pegged stablecoins should be restricted to licensed banks. He has warned that overly open markets could undermine the country’s strict foreign currency controls, a concern that reflects the delicate balance between fostering innovation and maintaining financial stability [1].

Globally, momentum around stablecoin regulation continues to build. The United States recently moved forward with the Genius Act, a federal framework aimed at reinforcing the dollar’s global position through stablecoin standards. As neighboring countries like Japan also advance in the space—most notably with the potential approval of a yen-pegged stablecoin—South Korea’s regulatory efforts are taking on added significance [1].

The proposed bill could serve as a model for other jurisdictions seeking to regulate stablecoins while supporting innovation. South Korea’s experience with digital finance, including its early adoption of blockchain and digital payments, offers a robust foundation for shaping effective and enforceable regulations [1].

As the bill progresses through the legislative process, all eyes will be on how it navigates the tension between oversight and growth. If implemented effectively, it could provide a stable and secure environment for digital asset innovation, encouraging further investment and development in the sector [2].

Source:

[1] South – https://www.scmp.com/business/banking-finance

[2] Trade FD (@tradefdsignals) – https://www.instagram.com/tradefdsignals/