South Korea Stablecoin Standoff: Banks vs Fintech on Won-Pegged Issuers

South Korea’s draft Digital Asset Basic Act is delayed as the Bank of Korea (BOK) and financial regulators clash over who may issue won-pegged stablecoins. The BOK favors a banks-first model — including proposals for bank-led consortia to hold at least 51% of any issuer and an interagency council with strong control — citing risks to monetary policy, capital flows, narrow banking and market concentration if large platforms issue tokens. Financial regulators and pro-industry lawmakers oppose a bank-only approach, arguing it would curb competition and innovation; they prefer licensing, reserve rules, third-party custody, segregation of reserves and supervision that can allow non-bank issuers. Market data show significant usage: roughly $64 billion (KRW-denominated) of stablecoin purchases in the 12 months to June 2025, underlining onshore demand. Industry responses are mixed: some banks are preparing joint ventures while many fintech firms remain cautious pending final rules and supply caps. Analysts suggest compromise options such as staged licensing (banks first), open licensing with systemic tiers, or allowing bank-led consortia without mandatory bank ownership. For traders: key watchpoints are issuer criteria, reserve quality and custody rules, mandatory redemption-at-par and any caps on supply. Continued delays or a banks-only regime could keep activity tied to offshore dollar stablecoins, constrain onshore liquidity and alter FX flows; a more open regime could spur domestic adoption and competition. Expect elevated regulatory risk premium for Korea-focused crypto projects until final rules emerge.