South Korea’s Stablecoin Push: Securing Financial Sovereignty Through Regulation

South Korea is set to unveil a comprehensive regulatory framework for won-pegged stablecoins in October 2025, marking a pivotal step in its digital asset oversight strategy. The Financial Services Commission (FSC) announced the legislation under the second phase of the Virtual Asset User Protection Act, which will mandate full collateralization of stablecoin reserves, stringent internal controls, and transparent operational standards for issuers. The bill aims to mitigate solvency risks and enhance investor protection, addressing concerns over the stability of tokens not fully backed by reserves. South Korea’s approach is expected to influence global regulatory trends, as policymakers increasingly seek clarity for the rapidly growing stablecoin marketSouth Korea to Roll Out New Rules for Won-Pegged Stablecoins^[1].

The new rules will require stablecoin issuers to maintain 100% collateralization of reserves, with strict oversight of asset management and daily operations. This aligns with the FSC’s broader efforts to integrate stablecoins into the formal financial system under controlled conditions. The framework also reflects growing domestic demand for stablecoins, which accounted for 47.3% of South Korea’s total cryptocurrency outflows in Q1 2025, amounting to $19.5 billion. USD-pegged stablecoins like USDT and USDC dominate the market, but the government’s push for a domestically issued won-backed alternative seeks to reduce reliance on foreign-pegged tokensStablecoin Usage in South Korea 2025: A Comprehensive Analysis^[2].

The regulatory initiative has been in development since 2023, with the FSC’s virtual asset committee refining capital requirements and operational guidelines. The Digital Asset Basic Act, proposed by the Democratic Party of Korea, further strengthens the framework by requiring a minimum equity capital of 500 million won ($368,000) for issuers and mandating regulatory approval from the FSC. These measures aim to create a competitive yet secure environment for stablecoin services, balancing innovation with risk managementSouth Korea to Roll Out New Rules for Won-Pegged Stablecoins^[1].

Industry stakeholders, including major banks and fintech firms, have actively supported the transition. Eight leading South Korean banks plan to launch a won-backed stablecoin by 2026, signaling a coordinated effort to establish a local digital asset ecosystem. KakaoPay, a subsidiary of tech giant Kakao, has emerged as a key player, with its stock surging 208% in early 2025 amid stablecoin-related developments. The company’s advanced payment balances and six stablecoin patent applications position it as a potential leader in the domestic marketStablecoin Usage in South Korea 2025: A Comprehensive Analysis^[2].

The legislation’s timing coincides with South Korea’s broader digital asset regulatory advancements, including the 2024 Virtual Asset User Protection Act. This law requires exchanges to store 80% of user assets in cold storage and mandates insurance against hacking incidents. The FSC’s 24-hour surveillance network for suspicious transactions underscores the government’s commitment to market stability. Meanwhile, the proposed 20% crypto gains tax, effective in 2027, introduces clarity for long-term investors while addressing capital outflowsStablecoin Usage in South Korea 2025: A Comprehensive Analysis^[2].

South Korea’s regulatory approach is expected to shape global stablecoin governance, particularly as the U.S. and EU refine their frameworks. The FSC’s emphasis on collateral transparency and institutional collaboration aligns with international efforts to address risks associated with unbacked tokens. By establishing a robust legal foundation for won-pegged stablecoins, South Korea aims to position itself as a hub for digital finance while safeguarding financial stability. The final details of the bill, set for release in October, will be closely watched by regulators and market participants worldwideSouth Korea to Roll Out New Rules for Won-Pegged Stablecoins^[1].