South Korea’s long-awaited Digital Asset Basic Act (DABA), a comprehensive framework intended to govern crypto trading and issuance in one of Asia’s most active digital asset markets, has been delayed due to disagreements among regulators over stablecoin issuance.
The main disagreement centers on who should have the legal authority to issue KRW-pegged stablecoins, according to a Korea Tech Desk article. The Bank of Korea (BOK) argued that only banks with majority ownership (51%) should be allowed to issue stablecoins. It said that financial institutions are already subject to strict solvency and anti-money laundering requirements and therefore the only ones capable of ensuring stability and protecting the financial system.
The Financial Services Commission (FSC), which oversees fiscal policy, is more flexible. It acknowledged the need for stability but warned that a strict “51% rule” could stifle competition and innovation and block fintech companies with the technical expertise to build scalable blockchain infrastructure from participating, according to the report.
The FSC cited the EU’s Markets in Crypto-Assets regulation, where most licensed stablecoin issuers are digital asset firms rather than banks. It also pointed to Japan’s fintech-led yen stablecoin projects as an example of regulated innovation.
The deadlock 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, an article in the Korea Times reported last week.
“A majority of participating experts expressed concern over the BOK’s proposal, and many questioned whether such a framework could deliver innovation or create strong network effects,” said DPK lawmaker Ahn Do-geol. “It is also difficult to find global regulatory precedents where institutions from a specific sector are required to hold a 51%.”
He said the BOK’s stability concerns could be mitigated through regulatory and technological measures, a view the lawmaker added was “broadly shared among policy advisers”.
Foreign issued stablecoins are also another important issue. 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 the bill’s passage until at least January, with full implementation now unlikely before 2026, according to AInvest. South Korea’s digital assets law marks a significant shift in a country that for nine years banned crypto, a stance its financial watchdog began to soften earlier this year.
