Gaps in won-denominated stablecoin legislation, and operating standards beyond the issuing entity

A public hearing on the proposed Digital Asset Basic Act (working title), which had appeared set to be held on September 30, 2026, was reported on September 22 to have been effectively called off as submission of the government bill was delayed. The bill is the so-called second-phase virtual asset legislation, intended to govern the market as a whole following the Act on the Protection of Virtual Asset Users enacted in 2023. According to the same report, the Financial Services Commission (FSC), Korea's financial regulator, has taken the position that it will cooperate with the aim of having the bill taken up by the legislative subcommittee of the National Policy Committee of the National Assembly in November. What has remained undecided for more than a year is mainly the entry rules: who may issue, and who may own exchanges. Some standards can be settled separately from that decision.

Policy direction repeated since January 2025

The first-phase law, the Act on the Protection of Virtual Asset Users, was enacted in 2023 and took effect on July 19, 2024. The National Assembly Research Service (NARS) described the Act as first-phase legislation that addressed user protection and market order first, with follow-up legislation planned from the outset.

At the second meeting of the Virtual Asset Committee on January 15, 2025, the FSC formally began discussions on the second-phase legislation. It put forward an approach covering businesses, the market and users, and said it planned to prepare a bill in the second half of that year. In an explanatory note on April 17, it stated that stablecoin regulation was the first item this meeting took up. The national policy task "Building a digital asset ecosystem" points in the same direction. It calls for promptly putting in place a regulatory framework that takes into account user protection, global consistency, and the impact on monetary and foreign exchange policy.

The second-half work plan report on July 15, 2026 continued this line. According to Edaily, the FSC plans to prepare the digital asset act within the year and to institutionalize the issuance and circulation of stablecoins. It will also strengthen rules against money laundering using virtual assets, including stablecoins. In a September 22 report, the Director of the Virtual Asset Division at the FSC said, "The overall direction has already been set."

The sentences describing the direction have stayed almost the same for more than a year and a half.

The entry rules behind "nothing has been decided"

Placing the FSC's explanatory notes in date order shows which items have remained undecided.

• July 30, 2025: details such as the issuing entity of stablecoins and the management of reserve assets (assets an issuer holds to back the coin's value)
• December 1, 2025: matters related to issuers, such as allowing consortia in which banks hold stakes of 51% or more
• December 31, 2025: matters such as restructuring the governance of virtual asset exchanges
• January 6, 2026: matters such as the issuing entity of stablecoins
• January 7, 2026: matters such as the shareholder composition of stablecoin issuers
• August 27, 2026: the cap on major shareholder stakes in virtual asset exchanges

The first Virtual Asset Committee meeting of 2026, held on March 4, heard overall views on the government's draft of the Digital Asset Basic Act under review. It also "discussed in depth" bank-led stablecoin issuance (50% plus one share) and the need for standards on dispersing exchange ownership. In its example questions for the National Assembly audit of government agencies, NARS noted of this meeting that, apart from the addition of discussion on regulating major shareholder stakes in exchanges, no progress or details of consultations had been announced.

On September 3, the chair of the National Policy Committee was reported to have said, "The government bill has not arrived yet." The chair also said that "nothing has been decided" on core issues such as a bank-led consortium of 50% plus one share and the regulation of exchange stakes. On September 27, Business Post expected the September deadline set by the government and the ruling party for preparing the bill to be missed. It named the issuing entity and exchange governance as the core of the disagreement.

What has repeatedly remained undecided is mainly who enters the market and who owns it, that is, the rules on entry and governance. The July 2025 note, however, also included the management of reserve assets.

A gap filled by self-regulation and de facto regulation

In its report "Analysis of issues for the 2026 National Assembly audit" on August 27, 2026, NARS analyzed policy to date as centered on responses to individual issues. Its assessment was that design principles and a timeline covering the market as a whole have not yet been clearly presented. It wrote that, in the meantime, a substantial part of matters such as listing review standards, management of circulating supply and disclosure has relied on the self-regulation of exchanges and the Digital Asset eXchange Alliance (DAXA), a joint body of Korean virtual asset exchanges.

There is also de facto regulation not written into law. The report gave four examples: the ban on initial coin offerings (ICOs); restrictions on corporate participation; the "one exchange, one bank" practice, under which each exchange partners with only one bank for real-name accounts; and the principle of separating finance and virtual asset businesses. The report found that because this approach has continued for a long time, market participants find it difficult to predict the direction of regulation. It added that this uncertainty is pointed to as one of the factors behind domestic projects setting up foundations overseas and startups relocating abroad.

Operating standards relied on by both sides of the entry rules debate

A September 27 Business Post report summarized the two positions on the issuing entity as follows. Those advocating bank-led issuance point to the impact large-scale redemptions could have on payment and settlement networks and financial markets, and stress that the existing prudential management and anti-money laundering (AML) systems of financial institutions should be used. The fintech and digital asset industries and some in politics advocate allowing non-bank issuers. Their view is that non-banks that hold sufficient reserve assets, bear redemption obligations and meet capital requirements should also be allowed to issue, so that competition and innovation can emerge.

The two positions diverge on who issues. Yet the grounds each side cites, taken together, form a list of operating standards: reserve assets and capital able to withstand redemptions, and anti-money laundering.

Of these, reserve assets and redemption also appear in the January 2025 committee materials. At that meeting, the FSC reviewed regulatory trends in major jurisdictions. The trend is to impose strict obligations on issuers to manage reserve assets and to explicitly guarantee users' right of redemption (the right to require the issuer to pay back in money).

Operational incidents were also discussed. The March 2026 committee meeting reviewed the progress of the February 6 erroneous virtual asset payout incident. Members agreed that exchanges' internal controls and risk management would first be put in place by amending self-regulation. It was also pointed out that, fundamentally, institutional effectiveness should be secured by enacting the Basic Act.

In discussing the government draft under review at the same meeting, members also stressed the need to introduce safeguards. These were establishing internal control standards and IT and security standards for exchanges, and imposing no-fault liability for damages (liability to compensate for losses from incidents even without fault). The subject of this discussion was exchanges.

The counterargument that the issuing entity comes first

There are also grounds for the opposite view. In its July 30, 2025 note, the FSC grouped the issuing entity and reserve asset management together as undecided details. The bank-led side's reasoning is that if banks issue, existing prudential management and AML systems come along as they are. Choosing bank-led issuance does not settle the matter either. According to the September 27 report, the current Banking Act in principle prohibits an individual bank from holding more than 15% of the voting shares of another company. This is why arrangements for several banks to share stakes, or exception requirements, also need to be considered. The counterargument that some operating standards vary depending on the issuing entity has grounds.

Even so, some parts can still be settled first. In the trends in major jurisdictions reviewed by the committee in January 2025, reserve asset management and the guarantee of the right of redemption were obligations placed on "stablecoin issuers." Whether the issuer is a bank was not specified separately. The internal controls, security and compensation mechanisms stressed by members at the March meeting were also recorded as items separate from the discussion of bank-led issuance. The list of standards and their minimum thresholds can be worked out together even before the issuing entity is decided, and what changes after the decision is how they are applied.

Three standards to set together regardless of the issuing entity

According to reports through September 27, submission of the government bill is being delayed, and the issuing entity and shareholding structure have not been decided. Three standards can be worked out even before a conclusion is reached.

First, minimum thresholds for reserve assets and redemption. Whatever business issues, the reserve assets able to withstand redemptions and the redemption commitments should be comparable against the same yardstick. This is a condition put forward by the side favoring non-bank issuers, and also a mechanism for withstanding the large-scale redemptions the bank-led side is concerned about.

Second, the scope of responsibility for operational incidents and AML. This covers the internal control, security and compensation standards discussed for exchanges at the March meeting, and the strengthening of AML for stablecoins. What remains is how to divide and apply these standards among the businesses handling issuance, circulation and wallets.

Third, disclosure of the decision-making process. As an example question for the National Assembly audit, NARS asked whether there is a need to regularize the schedule and decision-making procedures for the Basic Act discussions, or to disclose them in more detail. Only when the process is visible does the industry know when and through which channel to submit its views. What to carry over when listing review and disclosure, run so far under self-regulation, are moved into law is also a question to be handled within this process.

These three standards are gaps that need not stay open, even before it is decided who will issue.