Lawmakers Demand Stablecoin Bill Draft by December 10
South Korean lawmakers are pressing financial regulators to finalize a draft stablecoin bill before a critical December 10 deadline. Progress has been hampered by ongoing internal disagreements regarding the extent of control banks should wield over stablecoin issuers. The ruling party has issued a "last-minute notice" to the government, emphasizing the urgency of producing the draft before the specified cutoff. Kang Joon-hyun of the Democratic Party has stated that if the draft is not submitted on time, the ruling party intends to proceed with legislation through the political affairs committee. He anticipates that discussions on the bill will commence during the extraordinary National Assembly session scheduled for January 2026, should the draft be submitted.
The Financial Services Commission (FSC) confirmed that stablecoin regulations were discussed during a ruling party-government consultation on Monday, but acknowledged that work is still in progress. The regulator clarified that "no decision had been finalized regarding the formation of a consortium for issuing a KRW-denominated stablecoin," and both parties have agreed to expedite the preparation of the bill.
Investor Takeaway
The Unresolved Bank-Led Issuer Model Debate
Despite speculation from the previous month, the FSC has stated that "no concrete decision has been made on matters such as allowing a consortium in which banks hold 51% or more of equity." This statement underscores a significant deadlock involving the FSC, the Bank of Korea (BOK), and other governmental agencies concerning the structure of the proposed stablecoin regime. The BOK advocates for banks to hold a majority stake in any entity that issues a won-pegged stablecoin. This stance is rooted in the banks' existing oversight capabilities and their established track record in managing Anti-Money Laundering (AML) obligations.
Conversely, regulators involved in financial policy have expressed reservations, arguing that a model heavily dominated by banks could stifle competition and impede industry development. These persistent disagreements have already contributed to delays in the regulatory timeline. Reports from late November indicated that South Korea was unlikely to establish a clear stablecoin framework by the end of 2025, even as other countries are actively implementing licensing regimes and issuance guidelines.
Examining the Viability of Majority Bank Ownership
A representative from the BOK previously asserted that banks are "already under regulatory oversight and have extensive experience handling Anti-Money Laundering protocols," deeming them well-suited to lead a stablecoin issuance structure. However, voices within the industry have raised concerns that this model might be overly restrictive. In late October, Sangmin Seo, chair of the Kaia DLT Foundation, questioned the rationale behind mandating a 51% bank ownership requirement.
Seo argued that the central bank's reasoning "seems to lack a logical foundation," suggesting that a more effective approach would involve establishing clear eligibility criteria for issuers rather than automatically granting control to banks. He further emphasized the value that the Bank of Korea could provide by offering guidelines on risk mitigation strategies and outlining the qualifications necessary for an issuer to be considered trustworthy. This issue was revisited during the discussions on Monday. An official from Kang's office indicated that the ruling party is actively seeking a compromise that addresses the BOK's concerns regarding monetary policy while simultaneously avoiding the obstruction of industry innovation. The official stated that the party is "looking for a point of contact, considering both the stability of the BOK’s monetary policy and the industrial innovation emphasized by the [FSC]."
Investor Takeaway
The Path Forward for South Korea's Stablecoin Legislation
The route ahead remains constrained. Lawmakers are insistent on the government submitting the draft bill by December 10, yet the FSC and BOK have yet to reconcile their differing views on the fundamental structure. If the draft is submitted within the stipulated timeframe, it will proceed to committee review in January. Should it fail to meet the deadline, lawmakers may attempt to advance their own version of the legislation, though such a process typically leads to extended debate.
South Korean regulators have dedicated years to developing comprehensive crypto legislation, encompassing areas such as AML rules and exchange oversight. The stablecoin law was anticipated to be the subsequent step, particularly as domestic firms explore KRW-pegged tokens and global entities intensify their stablecoin settlement pilots. For the present, the country finds itself at a crossroads, balancing the central bank's cautious approach with the FSC's drive for an open market. Until the ownership issue is resolved, stablecoin issuers and banks remain in a state of anticipation, and South Korea risks falling behind its international peers that have already established frameworks for regulated fiat-backed tokens.