South Korea’s Stablecoin Law: ₩500M Capital Rule

In an ambitious step toward formalizing the country’s crypto market, South Korea’s ruling Democratic Party has unveiled the Digital Asset Basic Act. Proposed by lawmaker Min Byeong‑deok on June 10, 2025, the legislation introduces a strict licensing regime for stablecoin issuers in South Korea. Central to the bill is a requirement for issuers to hold no less than ₩500 million (approximately USD 367,890) in capital, ensuring financial robustness, transparency, and protection for holders. Supported by President Lee Jae‑myung’s pro–crypto agenda and marked by cooperation from major industry players like KakaoPay, this groundbreaking law signals a new chapter for digital finance in Asia’s fourth‑largest economy.

1. Background & Context

1.1 Rising Stablecoin Popularity in South Korea

During the first quarter of 2025, South Korean trades involving USD‑pegged stablecoins reached an astonishing ₩57 trillion (approximately USD 42 billion), according to Bank of Korea data binance.com+1coinpedia.org+1bloomberg.com+7cointelegraph.com+7binance.com+7coinpedia.org+1coinpedia.org+1. This trend reflects the increasing global demand for stable, blockchain‑based alternatives to traditional fiat currencies. From trading and remittances to DeFi ventures, stablecoins have rapidly integrated into both institutional and retail finance.

1.2 Campaign Pledge & Government Ambitions

President Lee Jae‑myung, elected June 3, 2025, campaigned on a promise to unleash a Korean won–based stablecoin. He repeatedly stated the need for a domestic digital currency to “prevent national wealth from leaking overseas” coinpedia.org+2cointelegraph.com+2theblock.co+2. The Digital Asset Basic Act embodies these ambitions, expanding regulatory clarity for all digital assets and strengthening investor protection frameworks.

2. Key Provisions of the Digital Asset Basic Act

2.1 Defining Digital Assets

The Act offers formal definitions for digital assets, including tokens, cryptocurrencies, and stablecoins. This legal clarity is the foundation on which transparency, liability, and investor safeguards are built.

2.2 Licensing Requirements for Stablecoin Issuers

At the heart of the Act is a formal stablecoin licensing regime:

• Minimum capital: ₩500 million (~USD 367,890) in owner’s equity theblock.co+6coinpedia.org+6coinpedia.org+6.

• Reserve must be guaranteed: Issuers are obligated to hold sufficient reserves to ensure the redeemability of their stablecoins.

• Regulatory approval: Applications to issue stablecoins must be approved and registered by the Financial Services Commission (FSC) cointelegraph.com+1binance.com+1.

• Oversight body: A Presidential Digital Asset Committee will ensure consistency across policies.

These conditions aim to prevent undercapitalized entities from introducing unstable stablecoins—an issue starkly highlighted by the 2022 collapse of Terra’s algorithmic USDT competitor coinpedia.org+2binance.com+2bloomingbit.io+2cointelegraph.com.

2.3 Enhanced Reporting & Transparency

Issuers would be tasked with periodic reports, data disclosure, and compliance with taxation and auditing norms. The legislation further introduces anti‑fraud provisions aimed at curbing insider trading, pump‑and‑dump schemes, and rug pulls coinpedia.org.

2.4 Presidential Committee Oversight

The formation of a Digital Asset Committee, chaired by the President, would take responsibility for coordinating regulation, with ministerial representation. This ensures digital finance policy aligns carefully with broader financial and economic agendas.

3. Ripple Effects Across the Crypto Landscape

3.1 Enhancing National Competitiveness

By setting clear standards and promoting local stablecoins, South Korea hopes to capture domestic transaction volume, reduce reliance on overseas alternatives like USDT and USDC, and create infrastructure for a vibrant, national digital‑asset economy coinpedia.org+1cointelegraph.com+1.

3.2 Attracting Innovation & Investment

Clarity drives capital. By demystifying regulations—particularly around licensing, capital, and audits—the bill invites startups, developers, and financial institutions to participate more confidently in DeFi, payments, and tokenization.

3.3 Stock Market Reactions

Crypto‑adjacent stocks have responded positively: KakaoPay surged as much as 45% over a week following the proposal cointelegraph.com+1binance.com+1. Gains reflect rising expectations that stablecoin licensing will source new use cases and generate fee revenue, especially for ecosystem leaders.

4. Regulatory Roadmap & Timeline

4.1 Parliamentary Process

• June 10: Bill introduced by Min Byeong‑deok techinasia.com+2coinpedia.org+2theblock.co+2cointelegraph.com+6bloomingbit.io+6coinpedia.org+6.

• In the following weeks: Debates in the National Assembly’s Economic and Financial Affairs Committee; stakeholders in finance, tech, and banking sectors expected to weigh in.

• Potential full passage by late summer; presidential signature to follow.

• FSC regulations to be finalized within 3–6 months, ushering real‑world implementation.

4.2 Bank of Korea’s Position

The Bank of Korea has expressed resistance, arguing that non‑bank stablecoins could undermine monetary control coinpedia.orgtheblock.co+2cointelegraph.com+2binance.com+2. The central bank is advocating for oversight over any won‑pegged digital assets. The Act’s success may depend on finding compromise, possibly through conditional issuance or joint oversight models.

5. Global Comparisons

5.1 Learning from Others

South Korea drew inspiration from regulatory steps in other jurisdictions:

• Hong Kong: Passed a stablecoin licensing regime effective August 1, 2025 binance.com+1coinpedia.org+1theblock.co.

• United States: The proposed “GENIUS Act” aims to regulate stablecoins and digital assets at the federal level.

• EU & Japan: Have earlier frameworks requiring capital buffers, reserve audits, and operational oversight for stablecoin issuers binance.com.

Korea’s move places it alongside global leaders in crypto regulation.

6. Industry Response & Corporate Momentum

6.1 KakaoPay & Kaia

Kakao’s blockchain subsidiary Kaia, supported by KakaoPay, is reportedly preparing a won‑pegged stablecoin. With its massive user base and digital‑wallet infrastructure, Kakao is well positioned to lead compliant issuance once the licensing regime is in place coinpedia.org.

Learn more about KakaoPay’s initiatives → KakaoPay Corporate Site

6.2 Broader Industry Engagement

Domestic banks, fintech firms, and blockchain startups have expressed support for the bill, recognizing the need for certainty. However, opposition may arise from traditional banks wary of competition or from the central bank with monetary policy concerns.

7. Benefits & Risks

7.1 Expected Benefits

1. Transparency & Trust: With capital requirements and audits, stablecoins become safer for users.

2. Domestic Development: Homegrown stablecoins can spur payment, remittances, and DeFi innovation.

3. Investment & Innovation: Clear rules draw capital and expertise.

4. Global Competitiveness: Korea strengthens its position in the fintech arena.

5. Consumer Protection: Legal definitions and regulation help mitigate misuse and fraud.

7.2 Key Risks & Criticisms

1. Central Bank Concerns: Overuse may dilute monetary policy effectiveness.

2. Implementation Costs: Meeting equity thresholds may be expensive for smaller startups.

3. Market Adaptation: Users must adopt new stablecoins over established USD‑pegged options.

4. Regulatory Uncertainty: Final FSC regulations and capital compliance methods may lag.

5. Competitive Tensions: Domestic banks may resist new digital‑currency entries.

8. Implications for Market Participants

9. Next Steps

9.1 Official Hearings & Committee Deliberations

Parliament will request input from FSC, local banks, fintechs, DeFi platforms, and academic experts to refine the bill and address concerns.

9.2 Central Bank Dialogue

Negotiations between BoK and lawmakers could yield a governance framework—possibly including central‑bank oversight or co‑licensing arrangements.

9.3 Drafting FSC Regulations

Once passed, the FSC will define application processes, capital monitoring, reserve audits, redemption mechanisms, and anti‑fraud safeguards.

9.4 Industry Preparation

Firms like Kaia and other innovators are expected to begin structuring capital, operational processes, and compliance strategies ahead of licensing launch—likely late 2025.

Conclusion

The Digital Asset Basic Act is a bold stride toward institutionalizing stablecoins in South Korea. By enforcing a ₩500 million capital threshold, reserve requirements, and oversight via the FSC and a Presidential committee, the legislation aims to establish trust, transparency, and competitiveness. The initiative reflects President Lee’s campaign commitments, aligns with global regulatory trends, and may reinforce South Korea’s position as a fintech pioneer.

Challenges remain—from central bank concerns to startup capital limits—but industry voices like KakaoPay and Kaia signal readiness to embrace the new system. If enacted, the law could launch a vibrant onshore stablecoin ecosystem, support won‑denominated transactions, and anchor Korea in the next wave of digital innovation.

ALSO READ:MEXC Launches Community-First Launchpad