South Korean stablecoin bill delayed Again, Here's why

Key Takeaways

• South Korea’s Digital Asset Basic Act, which aims to modulate stablecoin issuance, has been delayed until 2026 owed to ongoing regulatory disputes. 

• The superior deadlock is betwixt the FSC, which favors innovation and broader issuers, and the BOK.

• The measure requires 100% reserves successful harmless assets, specified arsenic slope deposits, with delays risking slower crypto maturation amid overseas stablecoin dominance.

South Korea’s much-awaited stablecoin regulations person been postponed, again.

The Digital Asset Basic Act, besides referred to arsenic Phase 2 of the Virtual Asset Act oregon the broad integer plus framework, has been delayed until 2026. 

This measure aims to found rules for stablecoin issuance, including licensing, reserve management, and capitalist protections, gathering connected the existing Virtual Asset User Protection Act enacted successful 2023-2024, with a absorption connected unfair trading and idiosyncratic safeguards.

According to local reports, the superior origin is an ongoing deadlock betwixt regulators, peculiarly the Financial Services Commission (FSC) and the Bank of Korea (BOK).

While the FSC, which oversees fiscal regulation, prefers a much flexible attack to promote innovation, the cardinal slope prioritizes fiscal stableness and stricter controls.

At the halfway of the quality is the BOK’s insistence that stablecoin issuers run arsenic consortia successful which banks clasp astatine slightest 51% ownership, citing banks’ acquisition with supervision and anti-money-laundering controls.

Tensions escalated further aft the BOK suggested forming a dedicated licensing committee oregon consultation assemblage with veto powerfulness implicit stablecoin approvals.

Regulators astatine the FSC rejected the idea, saying existing coordination mechanisms involving the FSC, BOK, and Ministry of Economy and Finance already supply capable oversight.

Beyond governance structure, disagreements widen to reserve requirements, enforcement authority, supervisory jurisdiction, and whether interest-bearing stablecoins should beryllium permitted astatine all.

South Korea has been moving connected broad crypto regulations, and initiatives person been boosted with the predetermination of President Lee Jae-myung, who prioritized processing Korean won-backed stablecoins to support monetary sovereignty amid the dominance of U.S. dollar stablecoins.

The projected measure requires issuers to clasp 100% reserves successful harmless assets, specified arsenic slope deposits oregon authorities bonds, with afloat custody by banks.

It guarantees idiosyncratic redemptions to forestall bankruptcy spillovers.

Despite delays, backstage assemblage enactment continues to progress, with large banks exploring consortia for won-pegged stablecoins, targeting 2026 launches.