TLDR
- New legislation aims to support local stablecoin issuance.
- Pension funds may soon invest in Bitcoin and crypto assets.
- KRW trading against US dollar stablecoins reached ₩57 trillion.
South Korea’s ruling Democratic Party has announced new plans to fast-track crypto and stablecoin legislation following the introduction of the Digital Asset Basic Act in June 2025. This is part of a broader effort by President Lee Jae-myung to strengthen the country’s digital asset framework and make South Korea a leader in the global digital economy.
The announcement highlights upcoming policy changes that aim to support the domestic crypto industry. The initiative includes the potential for local stablecoin issuance and enabling pension funds to invest in crypto assets like Bitcoin. These moves are designed to boost South Korea’s presence in the digital asset market by establishing a more secure and regulated framework.
Critical Roles in the Legislative Push
President Lee Jae-myung, who assumed office after a snap election, is leading these legislative efforts. His campaign emphasized supporting the crypto sector, and this new legislation underlines his commitment. Min Byeong-deok, a key lawmaker and chairman of the digital asset committee for Lee’s campaign, played a significant role. He officially introduced the Digital Asset Basic Act at a press conference.
Additionally, Bank of Korea Governor Rhee Chang-yong has expressed concerns regarding non-bank stablecoin issuers. He advocates central bank oversight as a necessary component of the proposed legal structure. The Financial Services Commission (FSC) is also involved and will be responsible for approving stablecoin issuers under the new regulations.
Objectives and Key Components of the Legislation
The Digital Asset Basic Act introduces several key requirements. Local stablecoin issuers must maintain a minimum of 500 million KRW in equity. This aims to ensure financial resilience and investor protection. The proposals also include guidelines for the national pension fund to explore investments in Bitcoin and other crypto assets. This potential shift signifies a growing institutional interest in digital assets.
Stablecoin operators will require approval from the FSC, and reserves must fully back any refunds. These provisions are positioned to foster greater transparency and investor security in the digital asset space. The licensing and oversight elements resemble international examples such as Hong Kong’s legislative approach and the US’s GENIUS Act draft.
Impact and Market Dynamics
The introduction of local KRW-backed stablecoins could shift trading volumes away from established US dollar stablecoins like USDT and USDC. This shift is expected as domestic alternatives become available. In Q1 2025, KRW trading against US dollar stablecoins on major Korean exchanges reached ₩57 trillion.
There is potential for increased on-chain total value locked (TVL) and liquidity as regulatory clarity encourages stablecoin adoption and promotes institutional support. Although specific TVL or staking information has not been released, the groundwork laid by the Digital Asset Basic Act indicates a focus on bolstering the local crypto ecosystem.
Regulatory Environment and Global Comparisons
The regulatory landscape for digital assets in South Korea draws parallels with international efforts like the Virtual Asset Investor Protection Act of 2024. However, that act did not sufficiently address stablecoin infrastructure, a gap the new legislation aims to fill. This approach reflects a global trend towards tighter regulation and increased transparency in the digital asset space.
South Korea’s efforts align with initiatives seen in other financial hubs, demonstrating a shift toward comprehensive digital asset legislation. Policymakers and institutions are increasingly aware of the need for a robust regulatory framework, mirroring similar policies adopted by regions like Hong Kong and the United States.
For more in-depth details on the South Korean governmental approach to stablecoin issuance and further policy developments, see Coindesk coverage.
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