South Korean Government to Establish Stablecoin Regulatory Framework and Introduce Digital Asset Spot ETF in 2026

South Korea’s government has announced plans to establish a regulatory framework for stablecoins and introduce digital asset spot exchange-traded funds (ETFs) in 2026. The move is part of the country’s 2026 Economic Growth Strategy, outlined by the Financial Services Commission (FSC). The framework will require stablecoin issuers to obtain licenses, maintain reserve assets equal to or exceeding 100% of issued tokens, and provide redemption rights to users.

The legislation will also set rules for cross-border stablecoin transactions, addressing concerns about financial stability and monetary policy. It follows years of regulatory division between the FSC and the Bank of Korea, which have disagreed on the appropriate governance structure for stablecoin issuance.

The government aims to align its approach with global trends, where digital asset spot ETFs are gaining traction in markets like the U.S. and Hong Kong. This follows a previous ban on such ETFs due to restrictions on underlying assets like Bitcoin.

Why Did This Happen?

Regulatory debates over stablecoin governance have long stalled comprehensive digital asset legislation. The Bank of Korea has consistently argued for a bank-led model, requiring at least a 51% stake by financial institutions in stablecoin consortia. The FSC, however, has resisted the threshold, warning it could hinder innovation and exclude technology firms.

Political momentum from President Lee Jae-myung’s administration has pushed for regulatory reform, particularly after the ruling Democratic Party introduced legislation to amend the Capital Markets Act. This includes expanding the definition of underlying assets for ETFs to include digital currencies.

What Are Analysts Watching Next?

The regulatory delay has pushed the comprehensive Digital Asset Basic Act into 2026, despite political pressure to accelerate adoption. The FSC and Bank of Korea remain divided on whether a new licensing body is necessary for stablecoin oversight.

The government’s 2026 strategy also includes amending laws like the South Korean Banking Act and the National Treasury Fund Act to support the use of blockchain-based payments. This is part of a broader effort to allocate 25% of national treasury funds to digital currency by 2030.

How Are Markets Responding?

Enforcement actions continue to intensify. In late 2025, the Financial Intelligence Unit imposed a ₩27.3 billion fine on Korbit for 22,000 anti-money laundering violations. Earlier sanctions had been imposed on exchanges like Upbit and Bithumb. The Financial Services Commission also issued verbal warnings to domestic ETFs limiting investments in crypto-related stocks, citing outdated 2017 guidance.

Authorities are also considering extending the travel rule to all virtual asset transfers, regardless of value. This is intended to prevent smurfing techniques used to evade reporting thresholds.

What’s at Stake for the Industry?

Regulatory uncertainty has created contradictory signals for asset managers. Some ETFs already hold significant exposure to crypto-related stocks like Coinbase and MicroStrategy, despite restrictions that apply only to domestic products.

Industry participants argue that limiting domestic ETFs while allowing U.S. alternatives creates an uneven playing field. They also warn that regulatory delays will further drive stablecoin activity to offshore platforms, reducing Korea’s ability to shape its own digital asset landscape.

The urgency for clarity is growing as global stablecoin transaction volumes hit $33 trillion in 2025. USDC, led by Circle, dominated transaction flows, while Tether’s USDT remained the largest stablecoin by market value in 2025.

South Korea’s regulatory framework for stablecoins is now expected to help shape the domestic market’s response to this global trend. The government’s 2026 Economic Growth Strategy aims to formalize rules for issuers and reserve assets while supporting the introduction of spot ETFs.