South Korea is advancing plans to legalize stablecoins, with President Lee Jae-myung quickly acting on his campaign promises. His party has introduced a bill focused on developing the domestic crypto landscape.
According to a Bloomberg report, the ruling Democratic Party presented the Digital Asset Basic Act on Tuesday, a legislative proposal designed to enhance transparency and competitiveness in the digital asset market.
Under the proposed law, South Korean firms would be permitted to issue stablecoins if they maintain a minimum capital of 500 million won (approximately $368,000). These companies would also be required to hold reserves to back user redemptions and gain approval from the country’s top financial authority—the Financial Services Commission.
The bill comes amid rising activity in the stablecoin sector, with Bank of Korea data showing that over 57 trillion won ($42 billion) in USD-backed stablecoins were traded on five major Korean crypto exchanges in Q1 alone.
The legislation aims to support this growing demand and further strengthen South Korea’s position as a key player in the global crypto market. Reports suggest that over 18 million Koreans—roughly one-third of the population—have participated in crypto trading.
Lee Follows Through on Election Promises
Following his June 3 snap election victory, President Lee has begun pursuing several pro-crypto initiatives. Beyond stablecoins, he has also suggested allowing Bitcoin ETFs and encouraging the country’s national pension fund to explore investments in digital assets.
“In order to prevent capital from flowing overseas, it’s crucial to create a stablecoin ecosystem backed by the Korean won,” Lee said during a policy discussion in May.
Pushback From the Central Bank
Despite growing momentum, the Bank of Korea remains cautious. Governor Rhee Chang-yong has raised concerns about non-bank-issued stablecoins, arguing they could hinder the effectiveness of national monetary policy. The central bank maintains that it should be the lead authority in any stablecoin-related oversight.
Memories of the 2022 collapse of the Terra ecosystem—founded by Korean entrepreneur Do Kwon—still linger, underscoring potential risks for retail investors.
Crypto-Focused Stocks See Market Surge
Investor enthusiasm has been evident on the stock market, particularly for crypto-related companies. KakaoPay, a major mobile payments platform, has seen its shares jump by up to 45% over the past week, according to Google Finance.
Still, analysts at JPMorgan, including Stanley Yang and Jihyun Cho, have urged caution. They argue the rally in Kakao-linked stocks lacks a strong foundation and say it’s too early to determine the actual benefits of the proposed stablecoin policy.
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