South Korea Postpones Digital Asset Law to 2026 Amid Conflicts Over Stablecoin Regulation

South Korea's Digital Asset Basic Law has been postponed to 2026 due to disagreements among regulators regarding stablecoin reserves, enforcement authority, and investor protection regulations. This delay introduces uncertainty in the country's cryptocurrency market.

Key Takeaways

South Korea's Digital Asset Basic Law is delayed until 2026 as regulatory disputes arise.
Key issues include stablecoin reserves, oversight authority, and investor protection.
The law aims to improve investor security and set stringent standards for digital asset operators.
The postponement may impact cryptocurrency firms in South Korea, influencing their operational and investment strategies.
Efforts are underway to unify various proposals into a cohesive digital asset regulation bill.

South Korea delays key stablecoin and crypto law to 2026.

Main Content

South Korea has decided to delay the implementation of its Digital Asset Basic Law until 2026 as disagreements among regulators continue to hinder progress on stablecoin oversight. Legislative sources indicate that the Financial Services Commission and the Bank of Korea have yet to find common ground on critical issues concerning stablecoin reserves and their enforcement responsibilities.

The Digital Asset Basic Law is anticipated to be the cornerstone of South Korea's cryptocurrency regulatory framework. The goal of this legislation is to enhance investor protection by establishing stricter legal standards for digital asset operators, as detailed in the draft bill.

One of the notable features of the proposed law includes a no-fault liability clause. This provision would make operators liable for user losses, even if they have not been proven negligent. Additionally, the draft mandates that stablecoin issuers maintain reserves that exceed 100% of the circulating supply. These reserves must be held at banks or other approved institutions and must be separated from the issuer’s balance sheet to mitigate contagion risks.

The regulation of stablecoins has become the main sticking point among regulators, with a general consensus on the need for tighter oversight. However, there remains a lack of agreement on how to divide responsibilities for enforcing reserve regulations and granting licenses.

The ongoing disputes have complicated decisions regarding enforcement powers and the treatment of reserve assets. As a result, authorities have decided it is better to delay the bill rather than proceed with legislation that lacks clarity and resolution on fundamental issues.

This postponement introduces further uncertainty for cryptocurrency firms operating in South Korea, which includes exchanges, payment processors, and stablecoin issuers. Industry observers have warned that the incomplete regulatory framework could impact product launches, investment decisions, and overall operational planning for these firms.

The ruling Democratic Party is currently working to bring together several lawmakers' proposals into a revised digital asset bill. President Lee Jae Myung has emphasized the importance of creating a Korean won-backed stablecoin, arguing that it could help diminish the dominance of US dollar-pegged stablecoins in the global cryptocurrency market, as stated by the presidential office.

The delayed Digital Asset Basic Law marks the second phase of South Korea’s cryptocurrency regulatory efforts. The initial phase, which is currently in effect, focused on addressing unfair trading practices within the digital asset sector.