South Korea Faces Dilemma Over Stablecoin Issuers

Economic Stability at Stake

Regulations concerning stablecoins in South Korea are currently stalled as regulators grapple with the question of who should issue tokens linked to the won. The legislation for digital assets is facing hurdles regarding the treatment of stablecoins, a central element in discussions about financial stability.

Conflict Between Central Bank and Financial Authority

The Bank of Korea advocates for a "banks first" model, wanting at least 51% ownership to be held by banks. They argue that the rapid growth in the use of stablecoins could impact monetary policy and financial stability. However, the Financial Services Commission and lawmakers are concerned that a bank-dominated model could limit competition.

Impact on Local Market

Stablecoins have become essential for local traders who use dollar-linked tokens to access offshore liquidity. In the past 12 months alone, purchases of stablecoins in won have totaled approximately $64 billion, highlighting the importance of regulating this sector.

Future Outlook

Delays are expected to push the adoption of the law to 2026. Fintech companies, such as Toss, are already preparing to issue their own stablecoins, awaiting clear regulations to launch their products. Additionally, discussions are ongoing about the possibility of an open licensing model allowing for broader participation in the future.