South Korea is racing against time to regulate stablecoins. The regulators are finalizing stablecoin legislation while industry players urge faster regulatory clarity to compete globally.
A seminar held on Monday at the National Assembly in Seoul gave a glimpse of the state of the industry.
Regulators Push Legislation
Since RedoPay, a Hong Kong company’s crypto payment service, launched in Korea last May, there has been a wide discussion in the industry that foreign-issued tokens like USDT (Tether) are already being used in everyday transactions, while domestic projects remain stalled by legal uncertainty.
The seminar speakers expressed concerns that the country risks falling further behind its international competitors unless it acts quickly. Lawmaker Min Byung-duk said, “Strong winds (of stablecoins) are blowing now. Many said they would carefully review digital assets, but never actually did. I created the draft law through public reviews—now let’s discuss it.”
While the National Assembly has already received multiple drafts about stablecoin legislation, including Min’s first bill, the government is trying to propose its own legal basis for issuing won-backed stablecoins and overseeing foreign-issued tokens already in circulation. Kim Sung-jin, head of the Financial Services Commission’s (FSC) Virtual Assets Division, said, “The FSC will actively support the National Assembly so discussions can begin in earnest.”
He said internal work on the legislation is nearly finished, adding that strong anti-money laundering (AML) safeguards and practical payment use cases must guide the legislative process. The government’s draft is expected to be ready in October.
Central Bank Holds onto CBDC and Bank-issued Tokens
The Bank of Korea, the central bank, has been on the opposite side of lawmakers. Bank Governor Rhee Chang-yong has publicly opposed allowing non-banks to issue won-backed stablecoins, warning of 19th-century private currency chaos repeating.
He has argued that unrestricted stablecoin issuance could clash with foreign exchange liberalization policies and significantly undermine monetary policy effectiveness nationwide.
At the seminar, Dong-seop Kim, who leads the Bank of Korea’s Digital Currency Planning Team, reiterated the bank’s stance, presenting results from the CBDC pilot conducted between April and June 2025. The program tested deposit tokens issued by banks on a blockchain platform backed by the central bank.
“The model is effectively a trusted form of stablecoin,” he said. The pilot featured QR-based zero-fee payments and programmable vouchers, showing that blockchain infrastructure could scale payments.
Yet he cautioned that technical success does not guarantee adoption. “Issuance alone does not guarantee use,” Kim noted. “Even with central bank backing, uptake depends on real demand and local use cases. Dollar stablecoins already dominate globally — we cannot afford to hesitate.”
Industry Calls for Clear Crypto Rules
Industry representatives expressed concern that regulatory gaps are blocking innovation. Shim Kyu Seok, Director of Inscobee’s Digital Asset Division, pointed out that USDT ATMs are already operating in South Korea, while firms preparing won-backed projects like Inscobee remain unable to launch.
“We even applied for the sandbox but were told it was impossible without legislation,” Shim said. “This uncertainty makes planning impossible. Korea risks becoming isolated in the global market if delays continue.”
Cho Jinseok, CEO of custody provider Koda, compared the issue to the history of automobiles, saying, “Cars were risky but became indispensable once traffic rules were in place. Stablecoins must be approached the same way.”
He also stressed the transparency of public blockchains for AML monitoring. Cho said, “There will never be a perfect law. Some side effects are inevitable, but the benefits outweigh the risks. Flexible rules and fast execution are essential.”
Lawyer Hyobong Kim argued that South Korea lacks a comprehensive policy strategy for digital assets. She said, “The US released a 166-page blueprint in July, while Hong Kong quickly moved from sandbox trials to legislation and strict AML guidelines. Korea needs a similar roadmap that defines roles for regulators, banks, and industry players.” She also called for mainnet security standards and long-term public blockchain infrastructure to be part of the plan.
Despite differences in perspective, participants converged on one point: South Korea must act quickly. They identified regulatory clarity, AML safeguards, concrete use cases, and stronger cooperation between government and private industry as common priorities.
“With foreign-issued stablecoins already embedded in daily life, South Korea cannot afford another delay,” one participant warned.
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