South Korea Proposes Phased Stablecoin Regulatory Framework Before Major Crypto Legislation
A new policy report calls for interim stablecoin rules and greater flexibility for issuers as lawmakers work to finalize comprehensive digital asset legislation.
South Korea is moving toward a pragmatic approach to stablecoin regulation, according to a policy report released this week that advocates for phased implementation of rules before the nation completes its broader Digital Asset Basic Act.
The recommendations come from research conducted by Hashed Open Research and the Solana Policy Institute, which analyzed discussions from a June symposium that brought together South Korean lawmakers, legal experts, and industry stakeholders to address regulatory gaps in the crypto space.
A Phased Approach to Stablecoin Oversight
Rather than waiting for complete comprehensive legislation, the policy report suggests South Korea should introduce interim licensing guidance and stablecoin-specific rules ahead of the broader Digital Asset Basic Act. This staged approach mirrors strategies employed by major regulatory bodies, including the European Union’s phased rollout of the Markets in Crypto-Assets Regulation.
The proposed framework would establish clearer rules for stablecoin issuance, disclosures, and market operations while allowing policymakers additional time to work through remaining legislative disagreements on the larger digital asset framework.
Balancing Industry Participation and Financial Stability
A key friction point in South Korean crypto legislation centers on determining which entities should issue stablecoins and under what conditions. The policy report recommends greater flexibility for stablecoin issuers rather than overly restrictive ownership structures.
A potential compromise gaining traction among lawmakers involves a hybrid ownership model where traditional banks retain majority stakes while fintech companies and non-bank firms handle operational management. This arrangement could leverage incumbent financial institutions’ stability and oversight capabilities while tapping the technical expertise of the crypto industry. Democratic Party lawmaker Ahn Dogeol has indicated that policymakers are actively considering such arrangements as they work to resolve longstanding disagreements delaying the legislation.
Unresolved Regulatory Gaps Requiring Attention
The policy report identifies several critical issues South Korea must address before implementing effective stablecoin rules. Financial institutions need clarification on which cryptocurrency-related activities they are permitted to conduct, and significant uncertainty remains around licensing procedures for stablecoin payment services.
Additionally, South Korea should establish rules governing foreign-issued stablecoins operating within its borders—a detail gaining importance as global stablecoin adoption accelerates. Kim Hyobong, a partner at law firm Bae, Kim & Lee, emphasized that resolving these uncertainties is essential for creating a functional market.
South Korea’s movement toward clearer stablecoin rules represents pragmatic recognition that digital asset regulation requires specialized frameworks tailored to specific asset classes. The phased approach recommended by the policy report could serve as a model for other jurisdictions balancing regulatory oversight with innovation incentives. Streamlined stablecoin regulation in major markets like South Korea ultimately strengthens the broader crypto ecosystem and creates a more stable operating environment for all digital assets including XRP.
Source: Hashed Open Research and Solana Policy Institute, via Cointelegraph. Not financial advice.