The Bank of Korea requires banks to hold over 50% of stablecoins; the ruling party opposes this and plans to propose an alternative solution.

South Korea’s stablecoin regulation has reached an impasse. The regulatory plan jointly proposed by the Financial Services Commission (FSC) and the Bank of Korea (BOK) requires bank ownership to exceed 50%, but this proposal has faced strong opposition from the ruling Democratic Party and other legislators in the National Assembly. This reflects a fundamental disagreement between South Korea’s financial regulators and the ruling party over the regulation of crypto assets.

Core Requirements of the Regulatory Plan

According to the latest news, the stablecoin issuance plan proposed by the Bank of Korea includes the following core requirements:

Policy’s True Intent

This plan essentially represents a contest between traditional financial institutions over the issuance rights of stablecoins. By requiring banks to hold over 50%, regulators ensure that banks have absolute control over stablecoins. Even if tech companies become the single largest shareholders, their shareholding must be lower than the combined holdings of all banks. This design cleverly limits the influence of tech firms within a controllable scope.

Why the Ruling Party Opposes

The opposition from the ruling Democratic Party is not without reason. In fact, this plan is using policy measures to protect vested interests—the traditional banking system. For political forces aiming to promote financial innovation and develop the digital economy, such high levels of financial regulation clearly do not align with development goals. The opposition from the ruling party indicates a fundamental political disagreement within South Korea regarding the direction of stablecoin regulation.

Deep Divisions in the Regulatory Landscape

This is not just a technical issue but also a matter of power distribution.

• Bank of Korea and FSC’s stance: Prioritize financial stability and risk control, leaning towards strengthening the role of traditional financial institutions
• Ruling party’s stance: Focus more on industry development and innovation, holding reservations about excessive regulation
• Tech companies’ interests: Seek greater autonomy in issuance and operation

These three parties have fundamentally conflicting interests, making it unlikely to reach consensus in the short term.

Uncertainty About Future Developments

According to the latest news, the ruling Democratic Party has announced it will propose an alternative plan, indicating that South Korea’s stablecoin regulation policy is far from settled. The final form of the policy will depend on the negotiations in the National Assembly. Possible directions include:

• The ruling party’s alternative gaining support, reducing the bank ownership requirement
• The regulatory plan being revised through compromises to find a balanced solution acceptable to all parties
• The policy falling into a prolonged deadlock, further delaying the compliant issuance of stablecoins

Summary

South Korea’s stablecoin regulation reflects a common dilemma faced by countries worldwide in digital asset regulation: how to protect financial stability without excessively hindering industry innovation. While the FSC and BOK’s 50% bank ownership requirement clarifies the policy direction, the opposition from the ruling party indicates that this plan is far from being the final decision. The key upcoming factor is how the ruling party’s proposed alternative will look and how the National Assembly will ultimately balance the interests involved. The outcome of this policy contest will directly influence the development prospects of South Korea’s stablecoin market.