South Korea Considers Bank-Led Won Stablecoin Rules

South Korea has moved closer to introducing bank-led rules for Korean won stablecoins, with a new digital asset bill expected this month as financial institutions and fintech companies compete for roles in issuing and distributing the tokens. According to CryptoNews, the proposed legislation could require bank-majority consortiums to issue won-denominated stablecoins domestically.

Regulatory Framework and Ownership Rules

Financial regulators are preparing legislation covering stablecoin issuance, distribution, payment services, and consumer protection requirements. Lawmakers remain divided over a proposal requiring banks to hold at least 50% plus one share in consortiums authorized to issue won-denominated stablecoins. While financial institutions would lead issuance, cryptocurrency exchanges and technology companies could participate in distribution, customer transactions, and merchant settlement services.

The Financial Services Commission is expected to present the main provisions of the Digital Asset Basic Act during November following consultations with other government agencies. The Bank of Korea has supported a bank-centered approach because privately issued stablecoins could become widely used for payments and potentially affect financial markets.

Industry Opposition and Fintech Concerns

The possible limits have drawn criticism from financial technology companies. Speaking at a November 12 National Assembly forum, VIDEX CEO Ryu Hong-ryeol urged lawmakers to permit qualified fintech firms to issue won stablecoins based on business capabilities and risk management systems rather than restricting issuance solely to banks. Ryu suggested that banks could manage reserves and liquidity requirements while technology companies handle blockchain operations, private keys, and payment services.

Meanwhile, South Korea’s competition regulator is reviewing the planned merger between Upbit operator Dunamu and Naver Financial, assessing potential competition restrictions across ten affected markets, including the future won stablecoin market.

Key facts

• South Korea's proposed digital asset bill may require bank-majority consortiums to issue won stablecoins.
• Banks would hold at least 50% plus one share in authorized stablecoin-issuing consortiums under the framework.
• The Financial Services Commission plans to present the main provisions of the Digital Asset Basic Act in November.
• VIDEX CEO Ryu Hong-ryeol publicly urged lawmakers to allow qualified fintech firms to issue stablecoins.
• South Korea's Fair Trade Commission is reviewing the proposed Dunamu and Naver Financial merger.