Stablecoin issuance expected to favor bank-led consortium model
Bill to address liability for overpayment incidents, operator misconduct
Exchange ownership limits and stablecoin issuer rules remain sticking points
US enacts payment stablecoin law; EU rolls out unified crypto regulation
South Korea's government is set to release this month the key provisions of a proposed Digital Asset Basic Act, a sweeping framework bill that would cover the issuance and distribution of virtual assets and the licensing of crypto businesses. The bill's submission has been repeatedly delayed by disagreements over exchange ownership caps and who should be allowed to issue won-denominated stablecoins, but a legislative timetable now appears to be back on track. With the United States and the EU having already enacted laws governing stablecoins and virtual asset service providers, Seoul is moving to establish a foundational framework for the industry and investor protection — in tandem with a planned deferral of virtual asset taxation.
The Financial Services Commission has wrapped up consultations with relevant agencies and plans to release the main contents of the government bill this month, according to political and financial regulatory sources. The legislation is expected to be introduced as a member-sponsored bill based on the government's draft. The ruling party is pushing to fast-track National Assembly deliberations once the government proposal is out, with the goal of passing it before the end of the year.
Delays pile up as key disputes stall bill and public hearings
The Digital Asset Basic Act is designed as a sector-specific law covering areas that existing legislation has not adequately addressed — stablecoin issuance and distribution, licensing of virtual asset service providers, exchange regulation and user protection. Financial Services Commission Chairman Lee Eok-won has said the bill could run to as many as 135 articles.
Deliberations have taken far longer than initially expected. The government draft had been expected to be ready in the second half of last year, but its submission was pushed back repeatedly, and an earlier target for passage this year was also missed. The delays caused a public hearing scheduled for September to fall through, disrupting the Assembly's legislative calendar. Several member-sponsored bills are already pending in the Assembly, but without a government draft, consolidated review of the competing proposals has yet to begin in earnest.
At the heart of the delays are two unresolved disputes: how much of an exchange's shares a major shareholder should be allowed to hold, and who should be permitted to issue stablecoins. Financial regulators argue that as exchanges transition from a registration system to a full licensing regime and take on greater responsibilities as market infrastructure, their governance structures must reflect that shift. One option under discussion would cap major shareholders' stakes at 15 to 20 percent — in line with limits applied to alternative trading systems — to prevent excessive concentration of control among a small number of founders or investors.
The industry has pushed back, arguing that such a cap could infringe on property rights. As a result, alternatives are being considered: giving existing exchanges a one- to two-year grace period to adjust their shareholdings, or restricting voting rights on shares held above the threshold rather than capping ownership outright. The specific regulatory level and any transitional measures could still change during National Assembly deliberations after the government draft is released.
On stablecoin issuance, a bank-led consortium model and broader participation by fintech and technology companies have been competing visions. The FSC and the Bank of Korea have emphasized stability, given that stablecoins would function as payment and settlement instruments, while the industry warns that limiting technology firms' involvement would hamper innovation and restrict use cases. The government draft is widely expected to favor the bank-led consortium approach.
US enacts payment stablecoin law; EU applies unified rules to crypto operators
Major economies have been moving to formalize regulation of stablecoins and virtual asset service providers. The United States enacted the GENIUS Act in July 2025, establishing a framework for the issuance and oversight of payment stablecoins. The law requires that only licensed issuers may issue payment stablecoins and that reserves be backed by liquid assets such as dollars or short-term government bonds. It also mandates reserve disclosure and anti-money-laundering compliance.
The EU applies common rules to stablecoin issuers and virtual asset service providers through its Markets in Crypto-Assets regulation, known as MiCA. Stablecoin provisions took effect in June 2024, with the remaining major rules entering into force in December of that year. Exchanges and other operators must obtain regulatory authorization, and major shareholders are required to notify supervisory authorities before acquiring or increasing stakes above certain thresholds. Unlike the flat 15-to-20 percent ownership ceiling being discussed in South Korea, the EU model relies on supervisory review and scrutiny of significant acquisitions rather than a hard cap.
Japan limits stablecoin issuance — defined as instruments pegged to fiat currency and redeemable at face value — to banks, fund transfer service providers and trust companies. The system restricts issuance to financial institutions while tailoring redemption and reserve-asset obligations to each type of entity. The model shares some similarities with the bank-centered issuance approach under discussion in South Korea, though Japan has kept the door open for non-bank fund transfer operators and trust companies as well.
International precedents show that the design of a stablecoin regime hinges on whether issuance is confined to banks or extended to technology firms, and to what degree. Exchange ownership regulation likewise admits multiple approaches — hard ownership caps, fit-and-proper reviews of major shareholders, or voting-right restrictions. The central challenge for South Korea's bill will be setting standards that secure stability and user protection without unduly blocking industry entry and innovation.
Tax deferral drives legislative push; operator liability for incidents also at issue
The recent acceleration in the bill's progress is closely tied to discussions over deferring virtual asset taxation. The ruling camp has been pursuing another postponement of the virtual asset income tax scheduled to take effect next year, and has framed enactment of the Digital Asset Basic Act as a prerequisite. Democratic Party of Korea leader Kim Min-seok said Wednesday that "it would be desirable to first enact the Digital Asset Basic Act to establish an overall framework and give businesses and investors time to adapt." The government has also signaled that it will push ahead with the digital asset legislation alongside the tax deferral.
The bill is also expected to include provisions aimed at preventing a recurrence of operational incidents such as the erroneous bitcoin overpayment by Bithumb earlier this year. Options under review include holding operators liable for damages from hacking or system failures regardless of negligence, and imposing sanctions — including business suspension — on operators that fail to actually hold the virtual assets entrusted to them by customers.
The virtual asset industry is calling on the government to set clear licensing criteria by operator type and to include measures that strengthen the sector's competitiveness alongside new regulations. "We need to subdivide business categories and establish corresponding licensing units to build a clear legal framework," one industry official said. "We also hope the bill broadly addresses competitiveness measures — such as allowing derivatives trading — to stem the outflow of capital to overseas platforms."
If the release of the government draft is delayed again or Assembly review drags on, the regulatory vacuum will persist. How concretely the bill defines user protection, operator oversight and stablecoin issuance standards during the tax deferral period will ultimately determine whether the Digital Asset Basic Act delivers meaningful results.
attom@heraldcorp.com
