South Korea Weighs Bank-Controlled Stablecoin Rules as Fintech Firms Push Back

Under the proposal, banks would be required to own at least 50% plus one share of consortiums authorized to issue stablecoins denominated in the South Korean won, according to a Nov. 12 report by crypto.news.

The plan would preserve a central role for traditional financial institutions while allowing cryptocurrency exchanges and technology companies to participate in trading, payment processing and merchant settlements.

The Financial Services Commission, South Korea’s top financial regulator, is expected to outline key provisions of the Digital Asset Basic Act in November. The legislation would establish a broader legal framework for digital assets, including licensing, issuance, distribution and consumer protections.

The proposed ownership requirement has not been finalized, and disagreements among regulators, lawmakers and industry participants have delayed progress on the legislation, crypto.news reported.

The Bank of Korea has favored a banking-led model, citing concerns about the potential effects of privately issued stablecoins on financial markets and payment systems. The central bank has previously advocated a gradual introduction of won-denominated stablecoins, beginning with regulated commercial banks.

Related: Stablecoins Without Borders: Stablecoin Multi-Country Issuance and Dollar-Run Risks in Europe

Stablecoins are cryptocurrencies designed to maintain a fixed value relative to traditional currencies or other assets. Their growing use in payments and transfers has prompted regulators worldwide to examine how issuers should be supervised and how customer funds should be protected.

Fintech Industry Challenges Bank Dominance

Technology companies are opposing restrictions that could prevent them from issuing stablecoins independently, arguing that regulatory approval should depend on operational competence and risk controls rather than banking status.

Ryu Hong-ryeol, chief executive officer of VIDEX, raised those concerns during a National Assembly forum on Nov. 12, according to crypto.news.

Ryu argued that regulators should assess prospective issuers based on their capacity to manage reserves, oversee token creation and redemption, and satisfy independent verification requirements.

He proposed dividing responsibilities between banks and technology companies, with financial institutions overseeing reserves and liquidity while fintech operators manage blockchain systems, digital security and payment infrastructure.

The debate reflects a broader disagreement over whether stablecoins should remain primarily within the regulated banking system or become a competitive market open to qualified nonbank companies.

Lawmakers and industry representatives are also examining technical safeguards involving digital wallets, private-key management, transaction authorization and independent audits, according to the report.

Upbit-Naver Deal Faces Regulatory Scrutiny

The outcome of the legislative debate could have implications for a proposed combination involving Dunamu, operator of South Korea’s Upbit cryptocurrency exchange, and Naver Financial.

Under the proposed transaction, Naver Financial would acquire Dunamu through a share exchange, potentially bringing together a major cryptocurrency trading platform and an established digital payments business.

Such a combination could create opportunities to integrate digital asset trading with consumer payments and merchant settlement services, depending on the final regulatory framework.

South Korea’s Fair Trade Commission began formal deliberations on Nov. 10 after examining competition concerns related to the proposed transaction, crypto.news reported.