South Korea pushes crypto law despite disputes

TLDR

South Korea is moving ahead with a sweeping Digital Asset Basic Act even though regulators, politicians, and industry still disagree on key details.

1. The draft law would set a strict framework for stablecoins and exchanges, including a 5 billion won capital requirement for issuers and a new crisis response council.
2. Regulators also want to cap major shareholders in exchanges at 1520 percent and tighten licensing, facing pushback from both industry and ruling party lawmakers.
3. If passed before Lunar New Year, core rules could roll out over the next 12 years and reshape how crypto businesses operate in Korea and across Asia.

Deep Dive

1. What The New Law Would Do

The ruling Democratic Party has finalized a draft Digital Asset Basic Act that it plans to submit before the upcoming Lunar New Year holiday. The bill is Koreas first full-spectrum framework for digital assets, building on last years Virtual Asset Users Protection Act that targeted market abuse and anti?money?laundering rules.

For stablecoins, the draft sets a minimum capital requirement of 5 billion won (about 3.5 million USD) for issuers, aligning them with electronic money firms and aiming to prevent undercapitalized projects collapsing under stress. It also creates a Virtual Asset Council led by the Financial Services Commission (FSC) chair, with the central bank and finance ministry represented, to coordinate responses to hacks, system failures, and major market disruptions. These points are laid out in detail in the draft summaries of the Digital Asset Basic Act and related coverage of the stablecoin capital rule in sources such as the Digital Asset Basic Act overview and stablecoin capital requirement reports.

Beyond stablecoins, the law would divide digital?asset businesses into multiple categories and require licensing for higher?risk activities like exchanges and certain custodial or trading services, with lighter registration for lower?risk ones.

2. Where The Disputes Are

Two fault lines stand out. First, the Bank of Korea and the FSC are still contesting who should have primary oversight of stablecoins, especially won?pegged tokens that the central bank worries could bypass capital controls and accelerate cross?border outflows if swapped into global stablecoins. Lawmakers and industry groups, by contrast, argue that limiting issuance to bank consortia would stifle innovation and leave Korea behind other hubs.

Second, the FSC wants to fold ownership caps for exchanges into the new framework. It is reviewing a 1520 percent ceiling on major shareholders stakes, arguing that exchanges are becoming public financial infrastructure and should not be tightly controlled by a single owner. Reports on the proposed exchange ownership caps note strong opposition from major platforms like Upbit and Coinone, and even concern inside the ruling party that the cap is unusually strict by global standards.

3. What To Watch Next

Lawmakers aim to submit the bill before Lunar New Year, then push it through committee and a National Assembly vote. Implementation of the new licensing regime is expected to take roughly 1218 months after passage, giving exchanges and issuers time to adapt.

Key open questions that will shape the impact include: whether non?bank fintechs can issue stablecoins, how strict the final exchange ownership cap will be, and how foreign stablecoins and offshore platforms are treated relative to domestic players. This law also sits alongside broader opening moves, such as planned spot Bitcoin ETFs from 2026 and rules for tokenized securities, which together could make Korea a tightly regulated but attractive venue for institutional crypto activity.

Conclusion

South Korea is not backing away from crypto, but it is trying to channel it into a heavily supervised, bank?like framework that emphasizes capital strength, governance, and crisis management. The eventual compromise on stablecoin oversight and exchange ownership caps will determine whether this becomes a competitive, institutional?grade regime or a model that pushes more activity offshore.