How is the stablecoin framework evolving in South Korea?
South Korea has emerged as a significant player in the global stablecoin dialogue, attracting attention from major entities like Binance and Tether.
These companies rank among the top stablecoin issuers globally, and their future could hinge on the direction of emerging regulations in this East Asian country.
Currently, multiple competing bills are under consideration in South Korea’s parliament, each aiming to define the issuance, backing, and regulation of stablecoins in the nation.
What seems like merely a local regulatory matter could have extensive ramifications. The ongoing debates within regulatory circles reflect South Korea’s broader strategic ambitions, particularly in tightening national control over digital finance, reducing dependency on dollar-backed stablecoins, and enhancing its position in the dynamic Asia-Pacific digital asset arena.
The suggested legislation addresses several key areas, including but not limited to:
- Capital reserve requirements
- Asset backing rules
- Conditions for interest payments on holdings.
For Binance, Tether, and other significant global actors, South Korea’s final legislation could either unlock a vast new market or impose regulatory constraints that reverberate beyond its borders.
Did you know? In 2023, Japan became one of the first major economies to grant stablecoins clear legal recognition as digital currency. The law mandates that issuers be licensed entities like banks, trust firms, or fund transfer agents. This clarity enhanced investor confidence and stimulated similar policy initiatives in Singapore and the EU.
Backdrop of stablecoin regulations in South Korea
So far, South Korea’s regulatory stance on stablecoins has been rather inconsistent. Proposed oversight is scattered across various agencies, and a comprehensive legal framework is yet to materialize. However, this landscape is poised for rapid transformation.
New proposals, including capital requirements as low as 500 million won and stricter regulations, could overhaul the existing disjointed regulatory framework.
In addition to legal reforms, significant economic concerns loom. In early 2025, over $19 billion in dollar-pegged stablecoins exited South Korea, highlighting the urgent need for capital retention and a stronger financial sovereignty.
This combination of draft legislation, economic imperative, and central bank caution continues to influence South Korea’s stablecoin regulatory approach.
Did you know? The European Union’s Markets in Crypto-Assets (MiCA) regulation, taking effect in 2024, establishes stringent rules concerning stablecoin reserves, transaction limits, and issuer licensing. It even imposes daily transaction caps for large-scale stablecoins to mitigate systemic risks while facilitating cross-border adoption among all 27 EU member states.
The competing stablecoin bills in South Korea
Several South Korean lawmakers have introduced bills targeting stablecoin regulation. While the ultimate goal of these bills is similar — to regulate stablecoins — their approaches differ significantly. Here’s a brief overview of a few of them.
Ahn Do-geol (Democratic Party): Value-Stable Digital Assets Bill
On July 28, 2025, Democratic Party lawmaker Ahn Do-geol introduced the Value-Stable Digital Assets Bill in South Korea’s National Assembly, aimed at regulating won-pegged stablecoins. The bill mandates issuers to:
- Maintain a minimum capital of 5 billion won (approximately $3.6 million)
- Hold 100% reserves in highly liquid assets, such as cash or government bonds, to ensure stability and reimburse users within three business days.
The bill establishes coordinated oversight by the Financial Services Commission, the Bank of Korea, and the Ministry of Economy and Finance, granting them emergency powers to address market disruptions. Interest payments on stablecoins are explicitly banned to safeguard monetary policy and prevent financial instability.
This legislative effort aligns with President Lee Jae-myung’s campaign commitments, aiming to bolster South Korea’s financial sovereignty and enhance competitiveness in the global digital asset arena.
Kim Eun-hye (People Power Party): Payment Innovation with Fixed-Price Digital Assets Bill
On July 30, 2025, Kim Eun-hye of the People Power Party presented the Payment Innovation with Fixed-Price Digital Assets Bill in the National Assembly.
The bill requires issuers to maintain a minimum capital of 5 billion won (around $3.6 million) and hold 100% reserves in highly liquid assets, such as cash or government securities, to ensure stability and protect investors.
This proposal emphasizes transparency through mandatory disclosure obligations, including detailed white papers and product descriptions, to build market trust. Unlike other bills, it does not prohibit interest payments, allowing issuers to offer yields to attract users. This market-friendly approach seeks to balance innovation with investor protection, positioning South Korea competitively in the Asia-Pacific digital asset landscape.
Min Byung-duk (Democratic Party): Digital Asset Basic Act
Representative Min Byung-duk of the Democratic Party filed the Digital Asset Basic Act on June 10, 2025.
The bill proposes a presidential-level “Digital Asset Committee” to oversee policy coordination and industry growth, while also emphasizing the necessity for private-sector participation.
It authorizes the issuance of won-based stablecoins, requiring issuers to maintain a minimum capital of 500 million won ($366,000) and ensure 100% reserves to uphold stability and facilitate user redemption. Additionally, the bill aims to enhance transparency, foster competition, and limit capital outflows to foreign stablecoins.
Comparison of South Korea’s stablecoin bills
The proposed stablecoin bills in South Korea reveal distinctly different priorities. Some focus on financial protections, while others aim to strengthen the nation’s global fintech position.
Below is a brief comparison of each bill against the others:
Why Binance and Tether are so keen on South Korea’s stablecoin regulations
Binance and Tether, two leading stablecoin issuers globally, have been closely monitoring South Korea’s regulatory advancements as they could influence both local and regional fintech markets. Their attention is centered on three main aspects.
- Opportunities: A flexible regulatory framework could support won-pegged stablecoins, facilitating cross-border transactions in the Asia-Pacific and appealing to local users seeking alternatives to USD-based coins.
- Risks: Rigid regulations, such as restrictions on interest payments, may deter users from utilizing stablecoins and hinder innovation, thus reinforcing the dominance of USD-pegged stablecoins like Tether’s USDt (USDT) and USDC (USDC), limiting global issuers to transactional functions.
- Strategic importance: With South Korea’s robust financial infrastructure, it stands as a potential hub for reserve-backed stablecoins, provided regulations remain balanced. Conversely, overly stringent policies could lead to the dominance of USD-pegged coins, curtailing market diversification.
Did you know? Singapore’s Monetary Authority permits non-bank stablecoin issuers but mandates high-quality reserves, regular audits, and well-defined redemption rights. Its 2024 regulations position the city-state as a crypto-finance hub.
South Korea’s stablecoin regulation in the global context
South Korea’s focus on stablecoins mirrors a global trend toward more stringent digital asset regulations. Its trajectory aligns with similar legislative efforts, such as the US GENIUS Act, which also seeks to standardize reserve management, transparency, and governance for stablecoin issuers.
As reported by the Financial Times, over $19 billion in dollar-backed stablecoins exited South Korea in the first quarter of 2025, with many investors transferring assets to offshore crypto exchanges that offer higher yields.
This capital flight has raised concerns about South Korea’s financial stability and hastened the push to establish a regulatory framework to retain capital domestically.
The objectives are twofold:
- Create safeguards to minimize financial outflows and bolster domestic innovation
- Implement a well-balanced regulatory system to enhance market trust, encourage institutional involvement, and promote the adoption of locally issued stablecoins.
However, the Bank of Korea has issued warnings about the risks associated with allowing non-bank entities to issue stablecoins at scale, citing potential threats to monetary policy, systemic risk, and heightened currency volatility.
Ultimately, how South Korea navigates these challenges will determine whether it establishes new benchmarks for balancing innovation with macroeconomic stability or serves as an example of (failed) regulatory overreach.
