South Korea’s Stablecoin Push: Will Regulation Spark a Crypto Boom?

South Korea is a leading player in the global crypto market, but when it comes to stablecoins, progress has stalled.

Despite multiple draft bills submitted to the National Assembly, disagreements among lawmakers, regulators, and the Bank of Korea have left the country in limbo.

While rivals like Japan, the US, and Germany move ahead with clear rules, South Korea risks falling behind.

The big question now is whether regulation will unlock innovation or choke it before it starts.

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Key Takeaways

1. South Korea’s stablecoin bills are stalled in committee, slowing market development.

2. Regulators disagree on whether fintech firms should issue stablecoins or only banks.

3. Industry leaders warn delays could push Korea behind global competitors.

The Current State of South Korea’s Stablecoin Legislation

South Korea’s stablecoin debate is centered on one issue: who should be allowed to issue them.

Lawmakers have proposed four different draft bills, but none have moved beyond committee stage.

The Busan Ilbo reported that the National Assembly, the government, and the Bank of Korea cannot agree on the scope of issuance or the required equity capital for firms.

One draft suggests fintech and IT firms should be allowed to issue stablecoins with at least 500 million won in equity.

Another takes a stricter view, setting the requirement at 5 billion won and limiting issuance to banks. This reflects a deeper clash between the central bank and lawmakers.

The Bank of Korea insists only banks should issue won-pegged coins, fearing that tech giants like Naver and Kakao could create private currencies that weaken monetary policy.

This divide is not just about money but also about power. South Korea’s economy is heavily influenced by large conglomerates, and regulators fear handing them too much control over financial systems.

On the other hand, excluding fintech firms could stifle innovation and prevent startups from entering the market.

The longer this debate continues, the more uncertainty grows for crypto firms. Industry leaders warn that delays risk leaving Korea behind as other markets advance with clearer frameworks.

Read Also: South Korea New Bill: Can Companies Make Their Own Stablecoins Now?

Why South Korea Risks Falling Behind

Globally, stablecoin regulation is accelerating. Japan recently approved its first yen-pegged stablecoin through fintech firm JYPC.

The US has also taken bold steps with the GENIUS Act, signed into law earlier this year, setting clear rules for stablecoin issuers. Meanwhile, Europe and China are developing their own frameworks.

South Korea, by contrast, is still debating. Critics argue that the country is wasting precious time.

At a recent seminar in Seoul, lawmakers and industry experts agreed that while global rivals act decisively, South Korea hesitates.

The result is that foreign stablecoins like USDT are already being used in everyday transactions in Korea, while local projects remain on hold.

The Bank of Korea has been testing its own digital solutions, including a central bank digital currency pilot.

While technically successful, officials admit that success in trials does not guarantee public adoption.

Dollar-backed stablecoins already dominate the global market, and hesitation could lock Korea out of the competition.

Industry voices highlight that businesses need regulatory clarity to plan for the future. Without it, startups cannot launch, investors hesitate, and Korea risks being isolated.

Delays are especially damaging in crypto, where technology evolves rapidly and opportunities are time-sensitive.

Read Also: South Korea FIU Revamps AML Rules for Stablecoin Era

Industry and Government: Searching for Middle Ground

Despite the disagreements, there are signs of progress. The Financial Services Commission has been drafting its own proposal, focusing on anti-money laundering measures and practical use cases for stablecoins in payments.

Officials say a government-backed draft will be ready soon, offering hope for faster discussions. Industry representatives, meanwhile, are urging flexible but firm rules.

Some argue that regulation should mirror the history of cars: once seen as dangerous, but now indispensable thanks to traffic laws.

Others stress that blockchain transparency makes stablecoins easier to monitor for compliance than traditional systems.

Lawyers and analysts also point out that Korea needs a comprehensive strategy, not just scattered bills.

The US, for instance, published a detailed blueprint, while Hong Kong quickly moved from sandbox trials to legislation.

South Korea needs to do the same, defining clear roles for regulators, banks, and private firms. Ultimately, both sides agree on one thing: delays must end.

With foreign stablecoins already embedded in the economy, Korea cannot afford to wait much longer.

The country must balance security and innovation, allowing growth while preventing risks to its financial system.

Read Also: Is South Korea Adopting Bitcoin for Its Elders? Exploring the Bitcoin Pension Fund Proposal

Conclusion

South Korea is at a crossroads. Clear regulation could unlock a new wave of innovation in the crypto market, but ongoing debates risk leaving the country behind.

The longer lawmakers delay, the more Korea risks losing out to global rivals already embracing stablecoins.

For investors and traders, this uncertainty can be frustrating, but it also highlights the need for reliable platforms.

Exchanges like Bitrue provide safer, more efficient ways to trade crypto even when local policies are unclear.

As South Korea finalizes its stablecoin framework, platforms like Bitrue make it easier to participate in global markets without waiting for stalled legislation.

FAQ

What is a stablecoin?

A stablecoin is a digital currency designed to maintain a stable value by pegging it to assets like national currencies or commodities.

Why is South Korea delaying stablecoin regulation?

Lawmakers, regulators, and the central bank disagree on whether fintech firms or only banks should issue stablecoins, as well as how much equity issuers must hold.

How are other countries regulating stablecoins?

Japan, the US, and Europe have already moved forward with clear rules, giving fintechs and banks pathways to issue stablecoins under strict compliance.

Why does stablecoin regulation matter?

Without regulation, local firms face uncertainty and cannot compete globally. Regulation ensures consumer protection, financial stability, and innovation.

Can South Koreans still use stablecoins?

Yes, foreign stablecoins like USDT are already in use, but local projects remain blocked until legislation is passed.

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