South Korea should introduce stablecoin regulations before finalising its broader digital asset legislation, while giving issuers greater flexibility and providing clearer interim licensing guidance, according to a new policy report from Hashed Open Research and the Solana Policy Institute.
Published Wednesday, the report summarises discussions from a June 23 symposium involving lawmakers, legal experts and digital asset industry participants as South Korea continues working towards a comprehensive regulatory framework for cryptocurrency.
Stablecoin Regulation Could Move Ahead of Digital Asset Basic Act
At the centre of South Korea’s regulatory efforts is the proposed Digital Asset Basic Act, which is expected to establish the country’s first comprehensive framework governing digital assets.
The legislation is intended to address areas including stablecoin issuance, disclosure requirements, crypto businesses and broader market rules.
However, progress has been slowed by disagreements between lawmakers over several competing proposals, particularly around who should be permitted to issue stablecoins.
The policy report argues that regulators should not wait for every element of the broader legislation to be resolved before establishing rules for the stablecoin sector.
Instead, South Korea could introduce stablecoin-specific requirements first and gradually integrate them into the wider regulatory framework.
Debate Continues Over Role of Banks
One of the most contentious issues involves the role traditional banks should play in stablecoin issuance.
Democratic Party lawmaker Ahn Dogeol said policymakers have been discussing a potential compromise that would allow banks to retain majority ownership of stablecoin ventures while fintech companies and other non-bank businesses manage their operations.
Such an arrangement could attempt to balance financial stability concerns with the need to encourage competition and technological innovation.
However, the broader debate remains unresolved as policymakers consider how much control banks should have over won-denominated stablecoins.
Industry Seeks Clearer Licensing Rules
The report also highlighted uncertainty surrounding the activities that financial institutions can conduct within the digital asset sector.
Kim Hyobong, a partner at Bae, Kim & Lee, argued that regulators should clarify which cryptocurrency-related services banks and other financial institutions are permitted to provide.
He also called for clearer licensing requirements for stablecoin-based payment services and a regulatory framework governing stablecoins issued outside South Korea but used within the domestic market.
Rules covering foreign-issued stablecoins could become increasingly important as global stablecoins interact with domestic payment and financial infrastructure.
South Korea Could Follow Europe’s Phased Approach
Kim also recommended that South Korea consider a regulatory strategy similar to the European Union’s implementation of the Markets in Crypto-Assets Regulation (MiCA).
Rather than waiting for the entire Digital Asset Basic Act to be completed, policymakers could establish rules governing stablecoin issuance first and introduce the remaining digital asset regulations in stages.
A phased approach could provide companies with greater regulatory certainty while lawmakers continue negotiating more complex areas of the broader crypto framework.
Stablecoins Become Central to South Korea’s Crypto Debate
The recommendations demonstrate how stablecoins have moved to the centre of South Korea’s digital asset policy discussions.
Regulators must balance several competing priorities: maintaining financial stability, protecting consumers, supporting domestic fintech innovation and preventing excessive concentration of the market among traditional banks.
Establishing interim licensing guidance could also reduce uncertainty for companies developing stablecoin infrastructure while the broader legislative process continues.
If policymakers adopt the report’s recommendations, stablecoin regulation could become one of the first major components of South Korea’s next-generation crypto framework, potentially arriving before the country’s comprehensive Digital Asset Basic Act is fully agreed.
