South Korea Unveils Regulatory Framework for Won-Pegged Stablecoins in October 2025

South Korea has taken a significant step toward strengthening its digital asset regulatory framework by unveiling a pivotal bill in October 2025 targeting the oversight of won-pegged stablecoins. The initiative is part of the second phase of the Virtual Asset User Protection Act and is designed to impose clear operational and transparency requirements on stablecoin issuers [1]. The bill focuses on three key areas: issuance requirements, collateral management, and internal control systems, all aimed at mitigating the risks associated with poorly managed or unbacked stablecoins [1].

Under the proposed regulations, stablecoin issuers will be required to adhere to strict guidelines regarding how the underlying South Korean won reserves are held and managed, ensuring that the stablecoins remain fully backed and transparent. These measures are expected to prevent solvency issues and provide users with greater confidence in the stability of the digital currency [1]. Additionally, the bill mandates robust internal control systems for issuers to manage risks effectively and comply with regulatory expectations.

The timing of this regulatory push is particularly noteworthy, as stablecoins continue to grow in popularity while simultaneously attracting increased global scrutiny. These digital assets, which maintain a stable value relative to the won, are vital for facilitating transactions and providing liquidity in the crypto ecosystem. However, the stability of these coins is contingent on the reliability of their backing assets, a concern that has been underscored by recent events in the broader crypto market [1].

South Korea’s initiative is expected to bring several benefits, including enhanced investor protection, greater market stability, and the potential for mainstream adoption of stablecoins. By creating a clear and enforceable regulatory framework, the government aims to foster trust among traditional financial institutions and everyday users, encouraging broader participation in the digital economy [1]. Moreover, the move could promote innovation while ensuring that new stablecoin applications develop within defined legal boundaries, reinforcing a responsible and secure digital financial environment.

This bill also signals South Korea’s intent to integrate digital assets more seamlessly into its existing financial system, albeit under strict regulatory oversight. The details of the legislation, which will be fully unveiled in October, are expected to provide clarity on the operational requirements for stablecoin issuers and their implications for the wider crypto community. Market participants, from individual investors to large institutions, are advised to closely monitor these developments as they could shape the future of digital asset regulation both domestically and internationally.

The regulatory move aligns with global trends in managing the risks associated with stablecoins, particularly their potential impact on financial stability. South Korea’s proactive approach highlights its commitment to supporting innovation while safeguarding the integrity of the financial system. As such, the country may serve as a model for other jurisdictions considering similar measures for their domestic stablecoin markets.

The outcomes of this regulatory initiative will be closely observed by policymakers and market participants worldwide, as they seek to balance innovation with risk management in the evolving digital currency landscape [1]. South Korea’s October bill marks a significant milestone in the ongoing development of a secure, transparent, and sustainable digital asset ecosystem.

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[1] title1.............................(https://coinmarketcap.com/community/articles/68a2cd13bbbb741f08522076/)