South Korea pushes second-phase stablecoin rules

TLDR

South Korea is fast-tracking a second-phase digital asset law that focuses on stricter stablecoin rules and a broader crypto market framework.

1. The government is accelerating the Digital Asset Framework Act, a second-phase bill that will set formal rules for stablecoin issuance, reserves, and crypto businesses.
2. The law could tighten requirements for stablecoin issuers and exchanges but also provide clearer licensing, disclosure and ETF pathways for a large retail-heavy Korean crypto market.
3. Key uncertainties are political timing and agency turf questions, especially around won stablecoins and oversight, which will shape how friendly the regime is to innovation.

Deep Dive

1. Second-Phase Bill Explained

South Koreas Financial Services Commission (FSC) is working on a Digital Asset Framework Act viewed as the second phase of crypto regulation, after the Virtual Asset User Protection Act that took effect in July 2024. Recent statements from FSC leadership and lawmakers confirm they want the new framework, centered on stablecoins and broader market rules, introduced during the fall legislative session, with up to ten pending bills consolidated into a single package. The proposals cover stablecoin issuance standards, reserve backing and circulation rules, as well as licensing, disclosures and internal controls for virtual asset service providers. This moves South Korea closer to a MiCA-style comprehensive regime rather than case-by-case guidance.

2. Impact On Stablecoins And Markets

Stablecoins are at the core of the bill. Regulators are debating who can issue won-denominated stablecoins, how reserves should be supervised and which agency leads oversight. The Bank of Korea favors a bank-led model for won stablecoins because of payment system and monetary policy implications. Policy roadmaps link stablecoin rules to central bank digital currency pilots, tokenized government bonds and potential spot crypto ETFs, meaning the framework will influence both everyday trading stablecoins and more institutional market structure. For exchanges and issuers, stricter reserve, redemption and disclosure obligations will raise compliance costs but could also increase trust in Korean venues and locally issued stablecoins, especially in a market with over ten million eligible crypto accounts and multi-trillion won daily volumes.

3. Uncertainties And What To Watch

Despite the push, passage is not guaranteed on the initial timetable. Past deadlines have slipped and there are unresolved disputes between the FSC and the Bank of Korea over stablecoin oversight and exchange ownership caps. Lawmakers also face other contentious financial issues that can slow the process. Until a draft is formally tabled, projects and issuers face uncertainty about eligibility, reserve models and cross-border rules, which could influence whether they base operations in Korea or elsewhere. The main signals to watch are publication of the government backed draft, any compromise on won stablecoin issuer requirements and how strictly VASP licensing and ETF provisions are framed.

Conclusion

South Korea is moving from a narrow user protection law toward a full digital asset regime in which stablecoins sit at the center of payments, trading and future ETF and tokenization plans. The eventual rules could make Korea one of the more structured crypto markets in Asia, but the exact balance between safety and flexibility will depend on how political and agency disputes over stablecoin control are resolved in the coming legislative sessions.