South Korea’s ruling party has drafted a bill to legalize stablecoins

What’s new? South Korea’s ruling Democratic Party, led by new President Lee Jae-myung, has unveiled a bill to legalize the issuance of stablecoins, designed to stimulate the growth of the local cryptocurrency market. As part of his election campaign, Lee Jae-myung promised to allow the issuance of stablecoins to local issuers.

Material by Bloomberg

What else is known? The Digital Asset Law presented by the party aims to increase transparency and promote competition in the cryptocurrency sector. Under it, local companies can issue stablecoins with a minimum equity capital of 500 million Korean won ($368 000).

They must also guarantee refunds to customers from reserves and get approval from the Financial Services Commission (FSC).

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According to the central bank, in the first quarter of 2025, the volume of transactions with leading dollar-stablecoins on the country’s five major exchanges reached 57 trillion won ($42 billion).

South Korea’s crypto market is one of the largest in the region, with more than a third of the population or about 18 million people participating. The new legislation is expected to boost trading volumes.

The new president has also voiced plans to create a national currency-pegged stablecoin. In May, he said, “We need to establish a won-backed stablecoin market to prevent national wealth from leaking overseas.”

In addition, Lee Jae-myung promised to allow bitcoin-based exchange traded funds (ETFs) and advocated for the National Pension Fund to invest in cryptocurrencies.

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At the same time, the president’s cryptocurrency ambitions face opposition from the central bank: its head, Rhee Chang-yong, warns that non-banking stablecoins could weaken the effectiveness of monetary policy. He believes it is the central bank that should take the lead in regulating local-currency stablecoins.

The sharp reversal in crypto policy is fueling a rally in local stocks such as mobile payment and digital wallet service KakaoPay, whose stock price has surged 45% in the past five days, according to Google Finance.

However, analysts at JPMorgan Bank said, “The rally in Kakao-related shares is fundamentally unjustifiable, as any concrete benefit from Lee’s stablecoin policy remains uncertain.”