How is the stablecoin framework evolving in South Korea?
South Korea has become a key focus in the global stablecoin conversation as it draws close attention from major players like Binance and Tether.
Both companies are among the largest stablecoin issuers worldwide, and they both could face major challenges depending on how new regulations unfold in the East Asian nation.
Multiple competing bills are currently under review in South Korea’s parliament, each trying to shape up how stablecoins are issued, backed and regulated in the country.
While it may appear as just a matter of domestic regulation, the ripple effect stemming from it could have far-reaching consequences. The debates and discussions going on around the regulatory circles reflect South Korea’s broader strategic goals. Especially in areas such as tightening national control over digital finance, limiting reliance on dollar-backed stablecoins, and strengthening its standing in the fast-moving Asia-Pacific digital asset scene.
The proposed legislation tackles several crucial aspects, including but not limited to:
- Capital reserve requirements
- Asset backing rules
- Whether interest can be paid on holdings.
For Binance, Tether and other major global players, South Korea’s final framework could either unleash a massive new market or impose regulatory burdens that ripple far beyond the country’s borders.
Did you know? In 2023, Japan became one of the first major economies to give stablecoins clear legal status as digital money. The law required issuers to be licensed entities such as banks, trust firms or fund transfer agents. That clarity boosted investor trust and spurred similar policy moves in Singapore and the EU.
Backdrop of stablecoin regulations in South Korea
South Korea’s approach toward stablecoin regulations has been, by and large, inconsistent so far. Proposed regulatory oversight is spread across various agencies, and no clear legal framework is in place yet. However, this could be rapidly changing.
New proposals, including equity requirements as low as 500 million won and stricter capital rules, could revamp the current patchwork of regulations.
Beyond legal changes, there are significant economic concerns. In the first quarter of 2025, over $19 billion in dollar-pegged stablecoins left South Korea, which underscored the need to retain capital and strengthen financial sovereignty.
The mix of draft legislation, economic urgency and central bank caution continues to shape South Korea’s approach to stablecoin oversight.
Did you know? The European Union’s Markets in Crypto-Assets (MiCA) regulation, effective 2024, sets strict rules for stablecoin reserves, transaction limits and issuer licensing. It even caps daily transactions for large-scale stablecoins. The aim behind enforcing such caps is to prevent systemic risks while enabling cross-border adoption across all 27 EU member states.
The competing stablecoin bills in South Korea
A number of South Korean lawmakers have presented their stablecoin-oriented bills. While the objective of all bills is similar — to regulate stablecoins — the method outlined by each is different. Here’s a quick look at some of them.
Ahn Do-geol (Democratic Party): Value-Stable Digital Assets Bill
On July 28, 2025, Democratic Party lawmaker Ahn Do-geol introduced the Value-Stable Digital Assets Bill in South Korea’s National Assembly to regulate won-pegged stablecoins. The bill requires issuers to:
- Maintain a minimum capital of 5 billion won (around $3.6 million)
- Hold 100% reserves in highly liquid assets, such as cash or government bonds, to ensure stability and user reimbursement within three business days.
The bill establishes coordinated oversight by the Financial Services Commission, the Bank of Korea and the Ministry of Economy and Finance. It grants them emergency powers to address market disruptions.
The bill explicitly bans interest payments on stablecoins to protect monetary policy and prevent financial market instability.
This legislative effort is largely aligned with President Lee Jae-myung’s campaign pledges. It aims to further strengthen South Korea’s financial sovereignty and competitiveness in the global digital asset market.
Kim Eun-hye (People Power Party): Payment Innovation with Fixed-Price Digital Assets Bill
On July 30, 2025, Kim Eun-hye of the People Power Party presented the Payment Innovation with Fixed-Price Digital Assets Bill in South Korea’s National Assembly.
The bill requires issuers to maintain a minimum capital of 5 billion won (approximately $3.6 million) and hold 100% reserves in highly liquid assets, such as cash or government securities. The underlying reason is to ensure stability and protect investors.
It emphasizes transparency through mandatory disclosure obligations, including detailed white papers and product descriptions, to harness market trust.
Unlike other proposals, the bill does not prohibit interest payments, implicitly allowing issuers to offer yields to attract users. This market-friendly approach aims to balance innovation with investor protection, thereby placing South Korea as a competitive player in the Asia-Pacific digital asset market.
Min Byung-duk (Democratic Party): Digital Asset Basic Act
Representative Min Byung-duk of South Korea’s Democratic Party filed the Digital Asset Basic Act on June 10, 2025.
The bill proposes a presidential-level “Digital Asset Committee” to oversee policy coordination and industry development. At the same time, it also emphasizes the importance of private-sector involvement.
The bill authorizes won-based stablecoin issuance. Issuers are required to hold a minimum capital of 500 million won ($366,000) and maintain 100% reserves to ensure stability and user redemption.
Additionally, the bill also aims to improve transparency, encourage competition and prevent capital outflows to foreign stablecoins.
Comparison of South Korea’s stablecoin bills
The stablecoin bills under discussion in South Korea show distinctly contrasting priorities. For instance, some emphasize financial safeguards, while others aim to improve the country’s global position in fintech.
Here’s a quick comparison of how each bill fares when compared one-on-one with the others:
Why Binance and Tether are so keen on South Korea’s stablecoin regulations
Binance and Tether, two top stablecoin issuers worldwide, have been closely observing South Korea’s regulatory developments. It could influence both the local and Asia-Pacific fintech markets. Their focus centers on three factors.
- Opportunities: A flexible framework could support won-pegged stablecoins. It will enable cross-border settlements in the Asia-Pacific. It is appealing to local users seeking alternatives to USD-based coins.
- Risks: Stringent rules, such as restrictions on interest payments, may discourage users from using stablecoins and limit innovation. It would also reinforce the dominance of USD-pegged stablecoins like Tether’s USDt (USDT) and USDC (USDC), thus restricting global issuers to transactional roles.
- Strategic importance: South Korea’s strong financial infrastructure positions it as a potential hub for reserve-backed stablecoins if regulations are balanced. However, overly strict policies would encourage dominance of USD-pegged stablecoins, which would then reduce opportunities for market diversification.
Did you know? Singapore’s Monetary Authority allows non-bank stablecoin issuers but demands high reserve quality, regular audits and clear redemption rights. Its 2024 rules position the city-state as a crypto-finance hub.
South Korea’s stablecoin regulation in the global context
South Korea’s stablecoin push reflects a broader global trend toward tighter digital asset oversight. Its direction aligns with legislative efforts like the US GENIUS Act, which also aims to standardize reserve management, transparency and governance for stablecoin issuers.
According to the Financial Times, more than $19 billion in dollar-backed stablecoins exited South Korea in Q1 2025. Many investors routed funds to offshore crypto exchanges offering higher yields.
This exodus has put pressure on South Korea’s financial stability and accelerated efforts to create a regulatory framework that keeps capital onshore.
The goal is on two fronts:
- Build guardrails that reduce financial leakage and improve conditions for domestic innovation
- A well-calibrated regulatory system could improve market trust, encourage institutional participation and drive the adoption of locally issued stablecoins.
But the Bank of Korea has issued warnings. It sees risks in allowing non-bank entities to issue stablecoins at scale, citing potential disruptions to monetary policy, systemic instability and increased exposure to currency volatility.
All said, how South Korea resolves these tensions will eventually determine whether it sets new standards for balancing innovation with macroeconomic stability or becomes a case study in (failed) regulatory overreach.
