South Korean Stablecoin Legislation Hits Roadblock as FSC Misses Deadline
The South Korean government, led by the Financial Services Commission (FSC), has failed to submit its long-awaited stablecoin regulatory framework to the National Assembly by the mandated December 10, 2025, deadline. This failure to deliver the "second-phase virtual asset bill," which is crucial for regulating won-denominated stablecoins, now risks a prolonged delay in the country's efforts to provide clear operating rules for the digital asset market. An FSC spokesperson cited the need for "more time to coordinate its position with the relevant agencies" as the reason for missing the deadline.
Standoff Between Regulators
The primary cause of the delay is an unresolved, high-stakes dispute between the FSC and the Bank of Korea (BOK) over the fundamental structure of stablecoin issuance and oversight. Both institutions agree that regulation is necessary and that domestic financial institutions must be involved, but they remain sharply divided on the extent of that involvement. The Bank of Korea insists on a bank-led consortium model where commercial banks must collectively own a majority stake of at least 51% of any stablecoin issuing entity. The central bank argues that this is essential to ensure robust reserve management, safeguard monetary policy stability, and leverage banks' existing Anti-Money Laundering (AML) infrastructure. The BOK is also seeking a significant oversight role, including a potential veto on issuance approvals and the power to request independent inspections, claiming that non-bank issuance could pose monopoly risks and undermine regulations that bar industrial firms from owning financial institutions.
In contrast, the FSC is reluctant to mandate the strict 51% bank equity ratio, arguing that such a requirement would create high entry barriers, stifle innovation, and exclude major South Korean technology and fintech firms from active participation. The FSC favors a more flexible, open framework that allows for diverse, non-bank entities to issue stablecoins under strict regulatory supervision, citing precedents set by the EU's MiCA regulation and Japan's regulatory approach. The FSC believes its own approval process should suffice for licensing and opposes granting the BOK what it sees as excessive supervisory authority.
Legislative Intervention Now Likely
The failure of the FSC and BOK to resolve their differences and meet the December 10 deadline has drawn sharp criticism from the National Assembly. Lawmakers from the ruling party had previously warned that if the government did not submit a unified draft, they would advance legislation independently. Given the continued delay, the National Assembly is now likely to proceed by reviewing lawmaker-initiated bills that were previously introduced, bypassing the government's stalled process entirely. This legislative move would allow the deliberation process to begin, though the ultimate goal of passing the second-phase stablecoin bill during an extraordinary session of the National Assembly in January 2026 is now highly uncertain. Industry participants face continued regulatory limbo, with all forms of KRW-pegged stablecoin issuance remaining illegal on South Korean territory until this legislative clarity is achieved.