South Korea Set to Launch Won-Backed Stablecoin Bill in October

During a recent policy dialogue, Representative Park Min-kyu of the Democratic Party confirmed that the government plans to submit the legislation to the legislature around October. The draft is expected to set out requirements governing stablecoin issuance, mandatory collateral protocols, and the establishment of robust internal control systems.

South Korea’s push for a domestic stablecoin framework follows the introduction of multiple related bills and growing private-sector interest. In July, lawmakers including Min Byung-deok introduced comprehensive legislation that would expand the ecosystem beyond central-bank dominance.

These proposals would grant issuance rights to private entities, including non-financial firms, as long as they meet capital requirements and comply with oversight standards. This represents a significant shift from earlier approaches that centered mainly on central bank involvement.

At the same time, the FSC’s legislative blueprint focuses on standardization, requiring full reserves and strict risk-management measures. The broader goal is to reinforce the won’s prominence in digital finance and reduce the risk of capital flight fueled by reliance on dollar-denominated tokens.

Globally, governments are grappling with similar challenges. The European Union’s Markets in Crypto-Assets (MiCA) regulation, which came into effect in 2024, sets strict requirements for stablecoin issuers, including reserve transparency and redemption rights. In the United States, the Treasury recently launched a public consultation under the GENIUS Act, also aimed at establishing a clear regulatory framework for stablecoins. South Korea’s initiative fits within this broader movement, reflecting the growing recognition that digital money needs consistent oversight to preserve financial stability while enabling innovation.

Financial institutions are already preparing for the shift. A consortium of South Korea’s leading banks, including KB Kookmin, Shinhan, Woori, Nonghyup, Citi Korea, and Suhyup, is moving forward with plans for a won-pegged stablecoin. Scheduled for launch between late 2025 and early 2026, the initiative is based on a fully backed, deposit-based model. Private-sector players such as Naver Pay and crypto exchange Upbit have also signaled interest in participating in the emerging ecosystem.

The Bank of Korea, meanwhile, has urged a cautious rollout. Deputy Governor Ryoo Sang-dai said initial issuance should be limited to well-regulated commercial banks before expansion to a broader group of issuers, in order to safeguard stability. Governor Rhee Chang-yong has also expressed concerns about the complexity of managing foreign exchange flows if stablecoins become widespread without sufficient oversight.

The central bank has recently paused its own central bank digital currency project, signaling that private sector stablecoins are likely to take precedence in the near term. Yet this shift has amplified anxiety over capital flows, particularly given the surging popularity of dollar-pegged tokens. More than $42 billion (₩57 trillion) in dollar-based stablecoin transactions were recorded in the first quarter of 2025 alone, underscoring the urgency of a domestic framework.

Consumer safeguards are also emerging as a central theme in the debate. Regulators warn that without strong protections, stablecoin users could face risks such as loss of funds if issuers collapse, opaque reserve practices, or limited redemption rights. The FSC has emphasized that upcoming rules will prioritize transparency and accountability to ensure that stablecoins function more like trusted payment instruments than speculative crypto assets.

South Korea’s forthcoming legislation illustrates a global trend toward sovereign digital money designed to complement, rather than replace, existing systems. If enacted in October and effectively enforced, the won-stablecoin law could reshape the country’s digital finance landscape by empowering banks and fintechs while giving consumers a domestic alternative to U.S. dollar tokens.

Yet policymakers remain cautious. Officials warn that if adoption accelerates without robust oversight, the impact on monetary policy and cross-border capital management could be destabilizing. This explains why both the FSC and the Bank of Korea emphasize gradualism over speed in rolling out the new framework. The government and central bank appear aligned on the need for gradualism, suggesting that while South Korea is keen to lead in stablecoin development, it will do so with an eye firmly onstability.