South Korea Introduces Landmark Stablecoin Bill with 5 Billion Won Capital Requirement to Counter USD Dominance

South Korea’s National Assembly has introduced a landmark stablecoin regulation bill, marking the country’s first legislative effort to govern won-based stablecoins and counter the dominance of U.S. dollar-pegged assets in global digital finance [1]. Spearheaded by the ruling Democratic Party (DP), the proposal aligns with President Yoon Suk-yeol’s campaign pledge to advance localized digital currency solutions, aiming to bolster financial sovereignty and mitigate risks associated with foreign currency reliance. The legislation mandates that stablecoin issuers maintain at least 5 billion won in capital and ensure 100% full reserve backing, a measure designed to enhance transparency and user protection while stabilizing domestic financial systems [2].

The bill’s drafting involved extensive consultations with economic stakeholders, including ministries, regulators, academics, and industry experts, as highlighted by Rep. Ahn, a key proponent. He emphasized that the initiative reflects the DP’s Future Economic Growth Strategy Committee’s priorities and seeks to address vulnerabilities exposed by the 2022 Terra-Luna collapse, such as reserve mismanagement and liquidity risks [1]. By requiring stablecoins to be backed by Korean assets like government bonds or commercial paper, the framework aims to localize digital financial tools and reduce exposure to external market fluctuations.

While the proposal has drawn bipartisan support for its focus on innovation and stability, it has also sparked political debate. Opposition parties have raised concerns about potential market fragmentation and the need for stricter safeguards against consumer exploitation, underscoring the tension between regulatory caution and fostering technological advancement [2]. Analysts suggest the bill could position South Korea as a global leader in non-dollar stablecoin governance, offering a model for balancing monetary sovereignty with international standards [3].

The timing of the proposal aligns with broader global efforts to regulate stablecoins, including the U.S. GENIUS Act, but South Korea’s approach emphasizes localization and monetary independence. This strategy could reshape the digital asset landscape by challenging the dollar’s hegemony in cross-border transactions and digital finance [4]. However, success will depend on parliamentary negotiations and stakeholder collaboration, as regulators aim to balance innovation with systemic risks.

For South Korea, the bill represents a strategic maneuver to elevate the won’s role in digital ecosystems, leveraging its advanced fintech infrastructure and proactive policies. As the National Assembly deliberates, the outcome may influence how other nations navigate the complex interplay of innovation, stability, and geopolitical economic dynamics in the digital currency era.

---

Source: [1] DP proposes bill on stablecoins in move to realize Lee campaign pledge. Korea Joongang Daily. https://koreajoongangdaily.joins.com/news/2025-07-28/business/finance/DP-proposes-bill-on-stablecoins-in-move-to-realize-Lee-campaign-pledge/2362923

[2] South Korea's Ruling and Opposition Parties Clash Over Stablecoin Regulation. UNLOCK. https://www.unlock-bc.com/146277/south-koreas-ruling-and-opposition-parties-clash-over-stablecoin-regulation/

[3] ETH breaks through $3900. Cointime. https://www.cointime.ai/flash-news/eth-breaks-through-23076

[4] Will the GENIUS Act bring about another DeFi Summer? MEXC. https://www.mexc.com/news/will-the-genius-act-bring-about-another-defi-summer/62633