Stablecoin rules and exchange ownership caps stall South Korea’s Digital Asset Basic Act
South Korea’s second-phase Digital Asset Basic Act has been delayed until 2026 amid regulatory, industry and political disputes centred on stablecoin rules and exchange governance. The core disagreement pits the Bank of Korea, which wants banks to dominate won‑pegged stablecoin issuance to protect monetary policy, against the Financial Services Commission (FSC), which favors broader authorization that would allow fintechs and approved entities to issue stablecoins. The draft bill proposes strict reserve requirements — issuers must hold reserves exceeding 100% of circulating supply in segregated bank deposits or government bonds and keep those reserves off their balance sheets — and introduces no‑fault liability for digital‑asset operators. A separate, contested proposal would cap individual voting stakes in major exchanges at 15–20%, forcing large shareholders to divest beyond the limit; industry groups warn this could deter investment and destabilize governance. The impasse has practical effects for markets: spot Bitcoin ETFs and other initiatives that require legal recognition of digital assets are blocked, a corporate pilot allowing ~3,500 firms to transact in virtual assets is on hold, and product launches, investments and partnerships face uncertainty. The delay contrasts with faster overseas moves — US spot‑Bitcoin ETFs (2024), proposed US stablecoin law (GENIUS Act, 2025), Hong Kong’s stablecoin law (Aug 2025) and Japan’s yen stablecoin (Oct 2025) — raising concerns about South Korea’s competitiveness for stablecoin issuance and crypto services. Political manoeuvres continue: the ruling party is consolidating proposals while the opposition plans its own bill via a special committee. Primary keywords: South Korea digital asset law, stablecoin rules, exchange ownership cap. Secondary keywords: Bank of Korea, FSC, reserve requirements, no‑fault liability, spot BTC ETF, fintech participation.
Bearish
The delay and unresolved disputes create regulatory uncertainty that is likely to be negative for crypto market activity tied to South Korea, particularly for Bitcoin-related products that rely on legal recognition (notably spot BTC ETFs). In the short term, uncertainty typically reduces institutional product launches, lowers trading volumes, and can trigger profit-taking or reduced bid-side liquidity as market participants wait for clarity. The stalled law blocks domestic issuance of won‑pegged stablecoins and pauses a corporate pilot, which reduces near-term stablecoin supply and utility in Korea and may shift issuance and business to overseas jurisdictions — a negative for native market growth. Long term, if the impasse forces restrictive measures (bank-centric issuance, tight reserve/segregation rules and ownership caps), it could limit innovation and institutional involvement in Korea, further weighing on local market depth and product availability. Conversely, a more permissive eventual outcome could be neutral-to-positive, but current news increases downside risk until clear rules are adopted.