South Korea’s bank-led stablecoin plan raises concerns

South Korea’s plan to allow bank-issued, won-denominated stablecoins faces resistance from lawmakers, highlighting divisions between the ruling Democratic Party, financial regulators, and the central bank.

The Financial Services Commission (FSC) has shifted its stance, now supporting the Bank of Korea’s (BOK) proposal to limit stablecoin issuance to consortia led by banks with majority control.

Under a revised bill submitted to the National Assembly, stablecoins could be issued by consortia in which banks hold a majority stake, but tech firms could become the largest single shareholder as long as banks retain overall majority control.

The proposal would introduce stricter requirements for cryptocurrency exchanges, such as higher IT stability standards, mandatory compensation for hacking losses, and fines of up to 10% of annual revenue.

Stablecoin issuers would need at least 5 billion won (US$3.7 million) in paid-in capital, a threshold regulators may raise as the market develops.

Lawmakers are expected to form a task force to propose alternative legislation as debates continue.

🔗 Source: The Korea Times

🧠 Food for thought

Implications, context, and why it matters.

Regulators push bank-led stablecoins to protect monetary policy

The Bank of Korea (BOK) warned that poorly backed stablecoins could depeg (loss of a fixed value) and disrupt capital‑flow management. It pushes for bank majority control in stablecoin consortia 1.
Naver Financial (the fintech arm of internet company Naver) and KakaoBank (a major internet-only bank) run closed-loop wallets. A widely used non‑bank won stablecoin could affect money supply outside central‑bank oversight 1.
The Financial Services Commission (FSC) backs bank-led consortia, and a revised bill to the National Assembly lets a tech firm be the largest single shareholder if banks keep majority control.
South Korea lags the United States, Japan and the European Union (EU) on stablecoin rules. Crypto firms warn delays could hurt competitiveness as dollar‑pegged tokens dominate markets 1.

Cybersecurity vendors eye exchange upgrades under new liability rules

Under the Virtual Asset Users Protection Act, exchanges must keep at least 80% of client assets in cold wallets. The Information Security Management System (ISMS) had a 70% bar, which lifts demand for cold storage and wallet tools 2.
Security failures can trigger fines up to 10% of annual revenue 3.
From January 2023 to September 2025, twenty incidents at domestic crypto exchanges hit more than 900 users and caused losses over 5 billion won. The record exposes gaps vendors can fix 4.
Mandatory liability coverage via insurance or reserves, with a floor of at least 5% of hot‑wallet holdings, opens a market for crypto insurance and risk assessment 2.