South Korea Digital Asset Basic Act Stalls Amid Stablecoin Issuance Clash

South Korea’s crypto ambitions are hitting a regulatory wall. The long-awaited Digital Asset Basic Act (DABA) is stalled as the nation's top financial watchdogs clash over who gets to issue stablecoins. It's a high-stakes standoff that could determine whether Korea becomes a global blockchain hub or a restricted market.

Regulatory Clash Over South Korea Digital Asset Basic Act

The core of the dispute lies in the 51% rule. The Bank of Korea (BOK) insists that only banks—or institutions with at least 51% bank ownership—should be allowed to issue KRW-pegged stablecoins. They argue that traditional financial institutions are better equipped to handle solvency and anti-money laundering (AML) requirements.

But the Financial Services Commission (FSC) isn't buying it. The regulator warns that such strict rules would crush innovation, locking out fintech firms that have the technical edge to build scalable blockchain infrastructure. The FSC points to the EU’s MiCA framework and Japan's fintech-led approach as better models for growth.

The Impact on Foreign Issuers and Local Presence

It’s not just local firms that are affected. The latest draft suggests that foreign-issued stablecoins like USDC will need a physical branch or subsidiary in South Korea to be legally traded. This means companies like Circle will have to establish a local presence, adding a new layer of compliance for global players entering the Korean market.