South Korea Lowers Stablecoin Entry Barrier by 90% to 500 Million Won

South Korea has taken a significant step towards regulating its burgeoning cryptocurrency sector with the introduction of the Digital Asset Basic Act. Proposed to the National Assembly on June 10, 2025, this legislation aims to legalize stablecoin issuance, enhance oversight of crypto firms, and prohibit unfair trading practices. This move aligns with President Lee's recent commitment to bolstering the nation's digital asset industry.

The new bill allows local enterprises with a capital of at least 500 million won to issue reserve-backed stablecoins, lowering the entry barrier from the previous 5 billion won requirement. This reduction is expected to encourage more companies to enter the stablecoin market, fostering competition and innovation. The legislation also establishes a licensing system to ensure compliance and transparency, with stablecoins pegged to the Korean won to stabilize the volatile crypto market and curb capital outflows.

The Digital Asset Basic Act introduces stringent regulations for crypto companies, including a ban on unfair trading practices and the establishment of a presidential committee to oversee digital asset policies. This committee will guide the implementation of the law, ensuring regulatory clarity and heightened scrutiny of crypto firms. The bill also mandates transparency in operations and imposes penalties for violations, aligning with South Korea's goal of protecting investors while supporting innovation in one of the world's most active crypto markets.

The legislation complements the Virtual Asset User Protection Act of 2023, expanding protections against fraudulent trading and addressing gaps in the existing regulatory framework. The government hopes that promoting won-based stablecoins will facilitate their use in Southeast Asia, leveraging South Korea's cultural influence in the region. The reduced capital requirements for stablecoin issuers are anticipated to attract more participants, fostering competition and innovation, although investors remain cautious following the Terra stablecoin's collapse.

South Korea's initiative is part of a global trend, with other jurisdictions also passing stablecoin legislation, reflecting the growing acceptance of stablecoins as a bridge between traditional finance and cryptocurrencies. The bill supports other crypto initiatives, such as tokenized securities, demonstrating President Lee's administration's pro-crypto stance. However, challenges remain, including public skepticism due to past crypto scandals and the need for robust oversight to prevent future collapses.

The presidential commission will play a crucial role in balancing innovation with investor protection. Min Byoung Dugg, leading the Digital Asset Committee, emphasizes that growth should be driven by private sector innovation, with regulations providing a solid foundation. The success of South Korea's crypto reforms could serve as a model for other nations, potentially accelerating the integration of digital assets into the mainstream financial system and attracting institutional investors.

As the National Assembly debates the bill, its passage could further cement South Korea's position as a global crypto hub, showcasing the region's commitment to transparency, investor safeguards, and regulatory clarity in the digital asset space.