South Korea’s Crypto Law Delayed Over Dispute on Stablecoin Issuers

South Korea’s long-anticipated crypto regulatory framework, initially slated for passage by the end of 2025, has been postponed due to a fundamental disagreement over which entities should be authorized to issue stablecoins. This impasse highlights the broader tension between fostering innovation in the digital asset space and ensuring financial stability and consumer protection.

What happened

South Korea’s new crypto law, designed to regulate digital assets including stablecoins, was expected to be enacted in late 2025. However, the legislative process has stalled primarily because of conflicting views on who should be allowed to issue stablecoins. The debate centers on whether stablecoin issuance should be restricted exclusively to banks or extended to a wider range of financial institutions such as fintech firms and cryptocurrency exchanges.

The Bank of Korea has voiced concerns about the financial stability risks that stablecoins might pose, advocating for strict controls that favor traditional financial institutions as the sole issuers. This position reflects a cautious regulatory approach prioritizing systemic risk management. Conversely, crypto industry groups argue that limiting issuance to banks could suppress innovation and reduce competition, potentially undermining South Korea’s position in the evolving digital asset ecosystem.

Caught between these opposing views, the Financial Services Commission (FSC) is seeking a regulatory balance that promotes innovation while ensuring consumer protection and clear oversight. Despite these efforts, the disagreement has resulted in a delay of the law’s passage, leaving the regulatory framework unsettled at a critical juncture for the country’s crypto market.

Why this matters

The dispute over stablecoin issuers in South Korea epitomizes a fundamental challenge faced by regulators globally: how to nurture innovation in emerging digital asset markets without compromising financial stability or consumer safety. Stablecoins, as digital tokens pegged to fiat currencies, have become integral to crypto markets for facilitating transactions and liquidity. Yet their potential to disrupt traditional finance has raised concerns about regulatory oversight.

South Korea’s cautious approach, as reflected in the Bank of Korea’s stance, underscores the priority given to regulatory clarity and risk mitigation over rapid market expansion. This approach may slow the pace of crypto innovation but aims to prevent systemic risks that could arise from unregulated or loosely regulated stablecoin issuance.

At the same time, the resistance from traditional financial institutions to share control over stablecoin issuance highlights institutional frictions that could shape the future trajectory of digital finance in South Korea. If the law ultimately restricts issuance to banks, it may limit the participation of fintech innovators and crypto exchanges, potentially affecting the competitiveness and diversity of the domestic crypto ecosystem.

More broadly, the delay and the unresolved dispute reflect the complexities regulators face in integrating new digital asset classes into established financial systems. South Korea’s experience may serve as a case study for other jurisdictions grappling with similar questions about balancing innovation, competition, and systemic safeguards.

What remains unclear

Several key aspects of South Korea’s crypto regulatory framework remain unspecified or unresolved. Notably, there is no publicly available draft text of the law detailing the precise regulatory criteria or framework that will govern stablecoin issuers. It is unclear what specific conditions, if any, might qualify fintech companies or crypto exchanges to issue stablecoins, should the law allow it.

The impact of the legislative delay on the growth of South Korea’s crypto market and on investor confidence is also not quantified in the available reporting. There is no data on the current volume or market share of stablecoins issued by different types of institutions within South Korea, limiting empirical assessment of the associated risks.

Furthermore, the law’s provisions regarding consumer protection mechanisms beyond issuer restrictions have not been disclosed. How South Korea plans to safeguard consumers in the event of stablecoin issuer failure or market disruptions remains unknown.

Lastly, the influence of international regulatory developments—such as those emerging from the European Union or the United States—on South Korea’s final regulatory stance has not been addressed in the current sources.

What to watch next

Decisions by South Korea’s Financial Services Commission on whether to broaden stablecoin issuance rights beyond banks, and the criteria that would apply.
Release of any official draft or final text of the crypto law clarifying regulatory requirements for stablecoin issuers and consumer protection measures.
Statements or policy updates from the Bank of Korea regarding its position on stablecoin regulation and financial stability concerns.
Responses from crypto industry groups and fintech companies to any new regulatory proposals or amendments.
Developments in international regulatory frameworks on stablecoins that could influence South Korea’s approach.

South Korea’s stalled crypto law underscores the persistent regulatory tension between innovation and risk management in digital finance. While the disagreement over stablecoin issuers remains unresolved, its outcome will have significant implications for the country’s crypto market structure, regulatory clarity, and the broader integration of digital assets into the financial system.

Source: https://www.coindesk.com/policy/2025/12/30/south-koreas-long-awaited-crypto-law-stalls-over-who-can-issue-stablecoins. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.