South Korea stablecoin legislation is being fast-tracked by the Democratic Party’s new Digital Asset Task Force to pass comprehensive rules on stablecoins, issuance, custody, disclosure and consumer protection by year-end 2025, aiming to protect the won and enable responsible fintech innovation.
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New task force aims to enact comprehensive stablecoin and digital asset laws by year-end 2025.
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Q1 2025 crypto outflows reached $40.6 billion, with roughly half routed via stablecoins—heightening policy urgency.
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Legislation will prioritize custody rules, disclosure, insurance, and coordination with the Bank of Korea and Financial Services Commission.
South Korea stablecoin legislation: Democratic Party’s Digital Asset Task Force to pass rules by 2025-end—read details and next steps. Learn more.
What is the Digital Asset Task Force and what will it do?
Digital Asset Task Force is a Democratic Party initiative set up in the National Assembly to draft and push through comprehensive South Korea stablecoin legislation by the regular and year-end sessions of 2025. The task force will coordinate government agencies, engage industry stakeholders, and prioritize consumer protection.
How will proposed South Korea stablecoin legislation protect monetary sovereignty?
The legislation targets issuance, distribution, and use of stablecoins to prevent outsized capital outflows that may undermine the won. Q1 2025 transfers from Korean exchanges totaled $40.6 billion, with about half flowing through stablecoins such as USDT and USDC, prompting policymakers to act. Han Jung-ae (Democratic Party policy chair) emphasized the need for rules to cover issuance and distribution, while Representative Lee Jung-moon signaled a will to establish won-backed stablecoin policy to counter dollar-pegged alternatives.
What consumer protections are being prioritized?
Industry experts and researchers highlight three immediate priorities: custody rules, disclosure requirements, and insurance mechanisms. Peter Chung, head of research at quantitative trading firm Presto Labs, stated that custody standards and clear disclosure will be essential to reduce counterparty risk and improve market transparency.
How will the legislative process unfold?
- Drafting: Task force produces draft bills covering issuance, custody, and supervision.
- Interagency coordination: Consultation with Financial Services Commission, Financial Supervisory Service, and Bank of Korea.
- Public hearings: Stakeholder hearings with exchanges and fintech firms to refine text.
- Parliamentary negotiation: Reconcile competing proposals and aim for bipartisan passage.
- Implementation: Phased rollout with regulatory sandboxes to encourage innovation.
Summary table: stablecoin activity and domestic projects
| Item | Detail |
|---|---|
| Q1 2025 crypto outflows | $40.6 billion moved abroad from Korean exchanges; ~50% via stablecoins |
| Domestic won-backed projects | BDACS launched KRW1 via Woori Bank; Kakao registered trademarks KRWGlobal and KRWKaia |
| Policy aim | Establish won-based stablecoin framework and consumer safeguards |
Frequently Asked Questions
How soon will won-backed stablecoins appear under regulation?
Legislative timelines target passage in 2025 sessions; regulated won-backed stablecoins (like BDACS KRW1) are already emerging and would be brought under the new legal framework once enacted.
What mechanisms will guard against runs or cross-border outflows?
Proposed measures include stricter issuance controls, reserves and audit standards for stablecoins, enhanced custody rules, mandatory disclosures, and coordination with the Bank of Korea to monitor systemic risk.
Key Takeaways
- Fast-tracked legislation: Democratic Party aims to pass comprehensive rules on stablecoins and virtual assets in 2025.
- Monetary sovereignty concern: $40.6B outflows in Q1 2025, half via stablecoins, spurred urgency.
- Policy priorities: Custody, disclosure, insurance, interagency coordination, and innovation sandboxes for testing.
Conclusion
The Democratic Party’s Digital Asset Task Force is accelerating South Korea stablecoin legislation to balance monetary sovereignty and fintech innovation. The proposed framework emphasizes custody, disclosure, and interagency coordination while enabling controlled experimentation via sandboxes. Stakeholders should monitor draft bills and public hearings for implementation timelines and compliance expectations. COINOTAG will continue reporting on legislative developments and technical guidance for market participants.
