Key conclusions

• Korea’s cryptocurrency bill is stalled due to stablecoin issuer rules.

• The central bank wants banks to retain control, often referred to as the “51%” threshold.

• Regulators and lawmakers fear that a bank-only model will reduce competition.

• Companies are lining up, with Toss planning a stablecoin with winnings once the rules are finalized.

South Korea’s next major cryptocurrency law is being held up by a seemingly plain question: Who can issue a winnings stablecoin?

The proposed digital assets baseline bill has been slowed by regulatory disagreement over whether stablecoins should be treated like bankmoney or a licensed digital asset product.

The focus is on the Bank of Korea’s desire to introduce a “banks first” model, preferably through bank-led consortiums with at least 51% bank ownership, arguing that stablecoins could, in their view, spill over into monetary policy, capital flows and financial stability if they move too quickly.

Meanwhile, the Financial Services Commission and lawmakers fear that a bank-dominated regime could significantly reduce competition and sluggish down innovation.

The impasse is now expected to push the bill to 2026.

Why Korea cares about won-stablecoins

South Korea’s stablecoins are already significant to local traders who move value into cryptocurrency markets, often via dollar-pegged tokens, to access offshore liquidity. If stablecoin employ scales, it could augment cross-border flows and complicate currency management, especially in a market where cryptocurrency share and retail exposure is extremely high.

This is why the Bank of Korea continues to treat issuance rules as a “financial stability” decision. Officials say a careful and phased rollout, starting with tightly regulated banks, reduces the risk of sudden outflows or loss of control over the circulation of “private money.”

At the same time, policymakers who want more companies to be able to issue winning stablecoins see the issue as a competitiveness issue. If Korea fails to build a trusted local option, users will continue to rely on foreign stablecoins, leaving the country with less regulatory visibility and less opportunity to develop a domestic stablecoin industry.

Did you know? In the 12 months to June 2025, the total value of purchases of Korean won-denominated stablecoins was approximately $64 billion according to Chainalytics in South Korea.

Regulatory background

The first major regulatory authority in South Korea work was the Act on the Protection of Virtual Property Users. It is based on market security, including the segregation and custody of customer funds, with banks designated as custodians of user deposits. The framework also mandates icy wallet storage, criminal penalties for unfair trading, and insurance or backup requirements in the event of hacks and system failures.

However, the “Phase 1” framework mainly focuses on how exchanges and service providers protect users. The unresolved dispute lies in the next step, the proposed Digital Assets Basic Law, in which lawmakers and regulators aim to define stablecoin issuance, supervision and issuer eligibility.

This is where the bill gets stuck. As Korea tries to answer the question of who can issue stablecoins, the Bank of Korea and the financial regulator are at odds.

Did you know? South Korea’s cryptocurrency regulations require licensed custody service providers to have at least 80% customer assets in offline icy wallets to protect against hacking and theft.

Three institutions, three incentives

South Korea’s stablecoin conflict ultimately escalated into a dispute over which institution should bear primary responsibility once private money becomes systemically significant.

The Bank of Korea views winnings-based stablecoins as a potential extension of the payments system and therefore as a matter of monetary policy and financial stability. Its senior leadership has advocated for a phased implementation that begins with tightly regulated commercial banks and only later expands to the broader financial sector to reduce the risk of disruptive capital flows and contagion effects during periods of market stress.

The Financial Services Commission sees the same product as a regulated financial innovation that can be policed ​​through licensing, disclosure, reserves standards and ongoing enforcement, without tying the market to banks as default winners.

This is why the FSC has rejected the idea that issuer eligibility should be determined primarily on the basis of ownership structure, and why, according to reports and leaked proposed approaches, multiple models have been explored rather than treating bank control as the only sheltered option.

Then there are lawmakers and party task forces who weigh policy promises, industry pressures and competitive optics.

Some proposals considered relatively low capital thresholds for issuers, which the central bank described as increasing the risk of instability. Others argue that a bank-first system could simply delay product-market fit and push activity toward offshore dollar stablecoins.

Even the debate over the “51% rule” has a local twist. The Bank of Korea has warned that allowing non-banks to take the lead could conflict with Korea’s long-standing separation of industrial and financial capital.

Did you know? Major Korean exchanges such as Bithumb and Coinone have added USDT/KRW trading pairs as of December 2023, making it easier to access stablecoins directly via winnings.

The “51% Rule”: what it is, why it exists and why it is controversial

In its strictest form, what Korean media calls the “51% Rule” suggests that the issuer of win-backed stablecoins should be a consortium led by commercial banks in which the banks own at least 51% of the shares. This structure would effectively give banks control over governance, risk management and, most importantly, redemption operations.

The logic is that if stablecoins begin to function on a gigantic scale like money, they could impact the transmission of monetary policy, capital flows and financial stability. The bank-led structure aims to import prudential discipline from day one, including capital standards, supervisory culture, anti-money laundering (AML) controls and crisis management, rather than attempting to introduce these safeguards after the non-bank issuer has already achieved systemic size.

The opposition is equally direct. The Financial Services Commission and pro-industry lawmakers argue that building banking controls into regulation could reduce competition, sluggish experimentation and effectively exclude capable fintech or payments companies that could provide better distribution and user experience.

Critics also point out that mandatory ownership thresholds are an indirect way of regulating risk, not the only way, given the availability of reserve requirements, audits, redemption rules and supervisory powers.

It’s not just about who issues the stablecoins

Even if South Korea eventually allows non-bank entities to issue win-backed stablecoins, regulators still have many levers to prevent the product from exhibiting risk characteristics similar to shadow banks.

The design of the government’s approach has focused on the quality and segregation of reserves, steering issuers towards highly liquid, low-risk hedging instruments such as bank deposits and government debt. Reserves would be held in a third-party custodian and structurally separated from the issuer to limit the fallout from bankruptcy.

Then there is the “monetary” principle of quick redemption at par. The publicly discussed proposals include clear redemption rules and tiny time frames that aim to prevent the stablecoin from turning into a gated fund during periods of market stress.

Korea’s broader regulatory stance is already pointing in this direction. The Financial Services Commission was building a user protection system based on retention standards and stringent operational requirements, such as thresholds for keeping customer assets offline, which shows that regulators are comfortable setting specific technical barriers rather than relying solely on licensing decisions.

Industry pressure and what to pay attention to in 2026

There is urgency. The regulatory impasse continues while the market is already preparing for win-backed stablecoins.

Major commercial banks are preparing to introduce a bank-based model, while gigantic consumer platforms and crypto industry players are exploring how they could issue or distribute a token with a fixed winning value if the rules allow it. Many banks and gigantic companies have this apparently position for this market, even as the political debate drags on.

However, fintechs do not want to operate in a consortium controlled by banks. The throw is a clear example. The company said yes preparation issue a won-based stablecoin once the regulatory framework is in place, treating the legislation as a gateway to whether the product can be brought to market.

This push and pull is what makes delays matter. The longer Korea debates issuer eligibility, the more everyday stablecoin activity defaults to offshore, dollar-based infrastructure, and the harder it becomes to argue that the sluggish pace reflects conscious choice rather than wasted time.

So what will happen in 2026? Scenarios considered include:

• Phased licensing, involving banks first and then the wider public, is an approach publicly supported by the Bank of Korea.

• Open licenses with a ‘system’ level where larger issuers have greater requirements.

• Bank-led syndicates, which are permitted but not mandatory, make it easier to fight for the “51% rule”.