South Korea is positioning itself at the forefront of the global stablecoin revolution with the formal introduction of the Digital Asset Basic Act, a comprehensive regulatory framework that could fundamentally reshape one of the world’s most active cryptocurrency markets.
President Lee Jae-myung’s administration has moved swiftly to deliver on campaign promises, proposing legislation that would allow domestic companies to issue Korean won-backed stablecoins while establishing rigorous oversight mechanisms.
The timing couldn’t be more strategic. As the United States prepares for crucial stablecoin legislation and global financial institutions explore digital asset opportunities, South Korea is making its bid to become Asia’s undisputed crypto hub.
Lawmaker Min Byeong-deok announced the bill’s submission during a June 10 press conference, describing it as a foundational step toward comprehensive digital asset regulation. The legislation builds upon the existing Virtual Asset Investor Protection Act while expanding the regulatory scope to include stablecoins, cryptocurrencies, and related service providers.
Ensuring Market Stability
The Digital Asset Basic Act establishes rigorous licensing requirements for stablecoin issuers, mandating a minimum capital requirement of 500 million won ($367,876) and Financial Services Commission approval.
These stringent standards reflect lessons learned from the devastating TerraUSD collapse in 2022, which wiped out $40 billion in value and serves as a constant reminder of the risks inherent in poorly regulated stablecoin projects.
Crucially, the legislation requires stablecoin issuers to implement bankruptcy remoteness protections and sophisticated reserve management systems, ensuring user redemption rights remain intact even if the issuing company becomes insolvent. These safeguards address fundamental concerns about stablecoin stability that have plagued the industry globally.
The framework also establishes a Digital Asset Committee under the President’s office to coordinate national policy, alongside a Digital Asset Industry Association responsible for monitoring market practices and evaluating token eligibility for exchange listings. This dual-oversight structure ensures both high-level strategic coordination and detailed operational oversight.
However, the initiative faces resistance from unexpected quarters. Bank of Korea Governor Rhee Chang-yong has expressed concerns that non-bank stablecoin issuers could undermine monetary policy effectiveness, arguing that the central bank should lead won-pegged stablecoin regulation. This tension between progressive political leadership and conservative monetary authorities could shape the implementation timeline.
Stablecoin Transformation
The legislation arrives as South Korea’s crypto market demonstrates remarkable depth and engagement. More than 18 million people—over a third of the population—actively participate in digital asset markets, with daily trading volumes on local exchanges sometimes exceeding traditional stock market turnover on the Kospi and Kosdaq indexes.
The global financial industry is watching closely as major institutions explore stablecoin opportunities. Recent developments include Deutsche Bank and Santander investigating stablecoin issuance, while Circle’s successful IPO has demonstrated strong investor appetite for stablecoin-related equities.
The Digital Asset Basic Act represents more than regulatory reform—it signals South Korea’s determination to lead the next phase of global financial innovation while maintaining the stability lessons learned from previous market turbulence.