South Korea's Stablecoin Legislation Stalls Amid Regulatory Power Struggle, While Industry Forum Advances Cross-Border Payment Plans

South Korea's push to establish a legal framework for won-pegged stablecoins has encountered a significant delay. The Financial Services Commission (FSC) missed a December 10 deadline to submit a draft stablecoin bill, a key part of President Lee Jae-myung's campaign pledge. The delay stems from an unresolved power struggle between the FSC and the Bank of Korea (BOK) over who should control stablecoin issuance.

The central bank argues stablecoins are akin to currency and insists domestic banks hold at least a 51% stake in any issuing entity, with veto power. The FSC resists this, citing overseas models like the EU's MiCA and Japan's fintech-led issuers, warning that bank-led issuance lacks global precedent and could stifle tech firm innovation. Negotiations continue, with a potential compromise involving flexible ownership thresholds.

Despite the legislative impasse, industry momentum is building. The first World Crypto Forum is set to host detailed talks on stablecoins and cross-border payments. The event will feature Japanese speakers, including JPYC CEO Noritaka Okabe, who will discuss Japan's regulatory model and offer guidance for Korean won-based stablecoins. JPYC is Japan's first FSA-approved yen-linked stablecoin issuer.

Progmat's CSO Takezawa Yusuke will discuss potential Korea-Japan stablecoin cooperation. Progmat, a platform co-founded by Japan's three largest megabanks, is also involved in "Project Pax," a cross-border stablecoin payment initiative with SWIFT. Major South Korean banks—KB Kookmin, Shinhan, Woori, NH Nonghyup, and K-Bank—have participated.

Other forum highlights include Visa's Asia Pacific digital currency head discussing Web3 integration and tests using USDC for real-time remittances, and LayerZero's APAC head proposing ways to manage multi-chain stablecoins. South Korean financial giants like KB, Shinhan, Hana, and Woori Financial Groups are considering forming a consortium for stablecoin issuance and distribution.

Industry groups warn that continued regulatory delays risk leaving South Korea behind the US, EU, and Japan. The urgency is underscored by recent enforcement challenges, such as the difficulty in freezing stolen funds from the Upbit hack, highlighting the need for clearer oversight frameworks.