South Korea Struggles with Stablecoin Regulation as Banks and Tech Firms Compete for Control

TLDR

• South Korea’s stablecoin regulatory framework is delayed due to disagreements over issuer control between banks and tech firms.
• The Bank of Korea insists that banks should hold majority control in stablecoin issuers to ensure financial stability.
• The Financial Services Commission and lawmakers push for tech firms’ involvement, citing innovation concerns.
• Several South Korean tech giants and banks are already developing stablecoin infrastructure in anticipation of regulatory clarity.
• Companies like BDACS have launched won-pegged stablecoins, signaling market demand despite regulatory uncertainty.

South Korea’s stablecoin regulation faces delays as authorities struggle to reach an agreement over issuer control. Regulators are divided over whether banks or technology firms should play the leading role in stablecoin issuance. According to a report by a local news outlet, the delay has pushed back the expected regulatory framework, which was initially scheduled for late 2025.

Bank of Korea Advocates for Bank Control

The Bank of Korea (BOK) has called for banks to hold majority control in stablecoin issuers. BOK officials argue that this will help maintain financial stability and uphold existing banking regulations. “Banks are best positioned to serve as majority shareholders in stablecoin issuers due to their regulatory oversight,” a BOK official said.

BOK’s stance reflects concerns that non-bank institutions may disrupt the stability of the financial system. The central bank emphasized that allowing tech companies to issue stablecoins could lead to issues with monetary oversight. BOK further explained that stablecoins are similar to deposit-taking instruments, which banks are traditionally responsible for.

The central bank also warned of the risks of monopoly formation if tech firms issue stablecoins within their ecosystems. If one company controls both payment services and stablecoin issuance, it could pose significant risks to competition and financial stability. As a result, the BOK insists that banks should be the primary issuers of stablecoins in South Korea.

Tech Companies Push for Greater Involvement

The Financial Services Commission (FSC) and lawmakers are pushing for a more inclusive approach to stablecoin regulation. They believe that tech firms should play a larger role in the stablecoin ecosystem, given their expertise and infrastructure. Several major tech companies, such as Naver and Kakao, have already begun developing stablecoin infrastructure.

Despite the BOK’s insistence on bank control, the FSC believes that over-reliance on banks could stifle innovation. Tech companies, which have invested in stablecoin infrastructure, argue that they should be allowed to take a larger role in issuing these tokens. Some bills currently under review by lawmakers also support this view, with some proposing that non-bank entities be permitted to issue stablecoins.

However, the debate over the role of banks versus tech companies has caused delays in the finalization of South Korea’s stablecoin regulation. As a result, the regulatory framework that was expected in late 2025 now faces an uncertain timeline.

South Korea’s Stablecoin Market Continues to Grow

Despite regulatory delays, private sector activity in South Korea’s stablecoin market is accelerating. Major banks and tech companies are working to establish stablecoin infrastructure ahead of the anticipated regulatory framework. Four of South Korea’s largest financial institutions have formed partnerships with tech giants to create KRW-pegged stablecoins.

Several companies, including BDACS and t’order, have already launched won-pegged stablecoins. These firms are preparing for the eventual rollout of stablecoin regulations, despite the uncertainty surrounding the rules. The private sector’s eagerness highlights the growing demand for stablecoins in South Korea’s digital economy.

As the debate between banks and tech firms continues, South Korea’s stablecoin regulation remains a work in progress. The outcome will determine who controls the issuance of stablecoins and how the market develops in the coming years.

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