South Korea's Stablecoin Bill Stalls Over Regulatory Disputes

• Bank of Korea warns won-pegged tokens could bypass capital controls
• Lawmakers and industry groups push for broader stablecoin access
• Disagreement delays South Korea’s crypto regulatory progress

South Korea’s much-anticipated stablecoin bill has hit a serious roadblock as regulators and lawmakers fail to agree on core elements of the proposed legislation. The dispute centers on who should be allowed to issue stablecoins, and whether won-pegged tokens pose a risk to the country’s financial stability.

Governor Lee Chang-yong of the Bank of Korea has voiced strong concerns, warning that stablecoins tied to the Korean won could be used to bypass capital controls — especially if users swap them with global stablecoins like USDT or USDC. Such activity, according to the central bank, could disrupt foreign exchange markets and challenge monetary policy.

The Bank argues that stablecoin issuance should be limited to regulated banks to reduce systemic risks and ensure oversight.

On the other hand, lawmakers and crypto industry groups are pushing for a more open system that allows non-bank fintech firms to issue stablecoins under supervision. They argue that limiting issuance to traditional banks would stifle innovation and prevent South Korea from staying competitive in the fast-moving global digital asset sector.

These disagreements have effectively stalled the progress of the Digital Asset Basic Act, a comprehensive crypto framework expected to guide the nation’s crypto regulations. The deadlock is also impacting related initiatives, including discussions around spot crypto ETFs and corporate trading guidelines.

This legislative delay reflects a broader challenge many countries face: balancing financial innovation with economic stability. South Korea, a major player in the global crypto market, risks falling behind if regulations fail to accommodate emerging technologies. At the same time, concerns about capital flow and exchange rate volatility are real, especially in a highly interconnected financial world.

The outcome of this debate could shape how other countries approach stablecoin regulation, particularly those with existing capital controls and complex foreign exchange policies.

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