South Korea wants to become one of the first major economies to establish a comprehensive legal framework for digital assets. More than a year after lawmakers introduced the country’s Digital Asset Basic Act, however, the legislation remains caught in a dispute over a question that many governments are now confronting: Who should control the future of digital money?
The debate has moved well beyond cryptocurrencies themselves.
At its center are two issues that could determine the structure of South Korea’s digital-finance industry for years to come—who gets to issue a won-backed stablecoin and who gets to own the country’s cryptocurrency exchanges.
The ruling Democratic Party and the government still hope to pass the legislation before the end of the year. But negotiations have repeatedly stalled as financial regulators, the Bank of Korea, lawmakers and the private sector struggle to reconcile competing visions for the market.
The discussions are expected to regain momentum after the Democratic Party concludes its national convention in August and reorganizes its digital-asset policy team. Both the government and the ruling party are now looking to the National Assembly’s regular session in September as the next opportunity to move the legislation forward.
The urgency reflects more than domestic politics.
Governments around the world are racing to define the legal status of digital assets as stablecoins become increasingly integrated into global payments and financial markets. The United States has advanced stablecoin legislation, Hong Kong has established a licensing framework, while the European Union has already begun implementing its Markets in Crypto-Assets (MiCA) regulation.
South Korea does not want to fall behind.
Momentum accelerated after President Lee Jae-myung’s administration made digital assets and a Korean won-backed stablecoin part of its broader financial-innovation agenda. Lawmaker Min Byung-dug introduced the first version of the Digital Asset Basic Act in June 2024, followed by the launch of a dedicated Democratic Party task force several months later.
The biggest disagreement concerns stablecoin issuance.
Financial regulators favor a bank-centered model in which commercial banks would hold majority ownership of stablecoin issuers. They argue that banks already possess the customer-identification systems, compliance infrastructure and risk-management capabilities necessary to protect financial stability and prevent money laundering.
The Bank of Korea has taken the same position.
Its ongoing Project Hangang pilot is testing a wholesale central bank digital currency under which the central bank issues blockchain-based settlement assets while commercial banks distribute tokenized deposits to consumers. Officials view the model as a way to modernize payments without weakening the traditional banking system.
Technology companies see the issue differently.
Fintech firms and industry groups argue that restricting issuance primarily to banks would limit innovation at a time when digital payments are rapidly evolving. They say technology companies should have broader access to the stablecoin market to accelerate product development and strengthen South Korea’s competitiveness against global rivals.
Even basic regulatory standards remain unsettled.
Proposals for minimum capital requirements range from roughly $360,000 to $18 million, reflecting different views over how much financial capacity stablecoin issuers should be required to maintain.
Ownership of cryptocurrency exchanges has become an equally contentious issue.
Lawmakers and the Financial Services Commission are considering limiting controlling shareholders to ownership stakes of about 20%, accompanied by a three-year transition period. Supporters argue that tighter governance standards are necessary as cryptocurrency exchanges evolve from lightly regulated registration systems into fully licensed financial institutions.
Exchange operators strongly disagree.
They argue that forcing existing shareholders to dilute their ownership would undermine property rights and discourage long-term investment in the industry. For several major exchanges, compliance would require controlling shareholders to dispose of substantial portions of their holdings.
Political timing has complicated the legislative process.
Government officials initially hoped to complete a unified proposal earlier this year. Instead, geopolitical tensions, shifting parliamentary priorities and domestic political events repeatedly delayed negotiations.
Even if discussions resume in August, reaching agreement before the National Assembly convenes in September remains uncertain.
And passage would represent only the beginning.
Implementing the new framework would still require detailed enforcement regulations governing licensing, supervision, custody standards, stablecoin reserves and investor protection. The operational rollout is therefore likely to extend well beyond the law’s formal approval.
The debate ultimately reflects a larger question facing financial regulators worldwide.
Digital assets are moving from speculative investments toward mainstream financial infrastructure. As that transition accelerates, governments must decide how much control should remain with traditional financial institutions—and how much should be opened to technology companies seeking to reshape the future of money.
South Korea’s Digital Asset Basic Act has become the country’s answer to that question.
For now, lawmakers agree on the need for regulation. They remain divided over who should be allowed to lead the next generation of digital finance.
