South Korea delays Digital Asset Basic Law to 2026 amid stablecoin oversight row
South Korea has postponed the Digital Asset Basic Law until 2026 after deadlock between regulators over stablecoin oversight, reserve rules and licensing authority. The draft law aims to strengthen investor protection with stricter standards for digital-asset operators, potential no-fault liability for user losses, and a rule that stablecoin issuers hold reserves exceeding 100% of circulating supply at banks or approved custodians and keep those reserves off issuers’ balance sheets. Disputes between the Financial Services Commission and the Bank of Korea — notably who enforces reserve rules and which body pre-authorises stablecoin issuers — are the core reasons for the delay. Officials also disagree on whether custodial roles should be limited to banks or opened to tech firms to encourage industry participation. The postponement increases regulatory uncertainty for exchanges, payment providers and stablecoin issuers, and may delay product launches and institutional onshore liquidity improvements. President Lee Jae-myung has pushed for a Korean won–pegged stablecoin as a strategic priority to reduce reliance on US-dollar-linked stablecoins. Traders should monitor revised drafts for custody rules, issuer authorisation frameworks and whether banks or tech firms will dominate issuance, because these details will materially affect onshore fiat-crypto rails, stablecoin liquidity and institutional flows.
Neutral
The delay and regulatory deadlock create near-term uncertainty rather than a clear price driver for any single crypto. For stablecoins and related onshore fiat-crypto rails, the news is mixed: stricter reserve and custody rules could improve long-term trust and institutional adoption (bullish) but the postponement and disagreement over issuer licensing and custodial roles may slow product launches and reduce short-term liquidity (bearish). Overall, the market impact is neutral because positive structural improvements are offset by execution risk and delays. Traders should watch subsequent drafts for concrete custody and issuer-authorisation rules; clarity permitting bank custody and clear licensing would likely be bullish for KRW-backed stablecoin activity and onshore flows, while restrictive or ambiguous rules favor continued reliance on USD-linked stablecoins and could pressure local stablecoin volumes.