South Korea’s long-awaited Digital Asset Basic Law (DABA), a broad framework aimed at regulating the trading and issuance of cryptocurrencies in one of Asia’s most active digital asset markets, has been delayed amid disagreements among regulators over the issuance of stablecoins.
The biggest disagreement centers on who should have the legal authority to issue KRW-pegged stablecoins, according to an article by Korea Tech Desk. The Bank of Korea (BOK) argued that only banks with majority ownership (51%) should be able to issue stablecoins. He said financial institutions are already subject to strict solvency and anti-money laundering requirements and are therefore the only ones in a position to ensure stability and protect the financial system.
The Financial Services Commission (FSC), which oversees financial policymaking, is more flexible. It acknowledged the need for stability, but warned that a strict “51% rule” could stifle competition and innovation, preventing the participation of fintech companies with the technical expertise to build scalable blockchain infrastructure, according to the report.
The FSC cited the European Union’s Cryptoasset Markets regulation, in which most licensed stablecoin issuers are digital asset companies rather than banks. He also pointed to fintech-led yen stablecoin projects in Japan as an example of regulated innovation.
The stalemate highlights a broader global debate over whether banks or fintech companies should control fiat-backed stablecoins, a decision that could shape competition, innovation and monetary oversight.
The ruling Democratic Party of Korea (DPK) also opposes the BOK’s 51% rule, a Korea Times article reported last week.
“Most participating experts expressed concern about the BOK proposal, with many questioning whether such a framework could deliver innovation or generate strong network effects,” said DPK lawmaker Ahn Do-geol. “It is also difficult to find global legislative precedents where institutions in a specific sector are required to have 51%.”
He said the BOK’s concerns about stability could be mitigated through regulatory and technological measures, a view that, the lawmaker added, “is widely shared among political advisors.”
Foreign-issued stablecoins are also another key sticking point. According to an earlier draft of the government proposal prepared by the FSC, foreign-issued stablecoins would be allowed in South Korea if they are licensed and have a branch or subsidiary in the country. That would require issuers like Circle, which issues USDC, the world’s second-largest stablecoin, to establish a local presence for the token to be used legally in the country.
The regulatory impasse is expected to delay passage of the bill until at least January, and it is now unlikely to be fully implemented before 2026, according to AInvest. South Korea’s digital assets law marks a significant change in a country that for nine years banned cryptocurrencies, a stance its financial watchdog began softening earlier this year.
