South Korea’s long-awaited Digital Asset Basic Act (DABA) will not be submitted before 2026, after regulators failed to resolve a fundamental dispute over who should control the issuance of won-pegged stablecoins.
The delay underscores growing tension between monetary authorities and financial regulators over the future shape of the country’s digital asset market.
A Regulatory Deadlock at the Core
At the heart of the stalemate is a sharp divide between the Bank of Korea and the Financial Services Commission.
The central bank is pushing for a conservative framework. It wants stablecoins issued only through bank-led consortia, with traditional lenders holding at least a 51% ownership stake. From the BOK’s perspective, this threshold is essential to protect monetary stability and contain systemic risk tied to digital representations of the won.
The FSC, however, sees that same requirement as overly restrictive. It argues that enforcing a fixed ownership rule would sideline fintech firms and technology companies, reducing competition and slowing innovation in a sector meant to modernize finance.
With neither side willing to compromise, progress on the legislation has effectively stalled.
What the Bill Still Agrees On
Despite the disagreement over who can issue stablecoins, regulators broadly align on how those tokens should be safeguarded.
The draft framework mandates full backing of stablecoins with 100% reserves held in low-risk assets such as bank deposits or government bonds. Those reserves would also need to be placed with approved third-party custodians, typically commercial banks, to protect users if an issuer fails.
Beyond stablecoins, the bill signals a potentially major shift for South Korea’s crypto market. It opens the door to the return of Initial Coin Offerings, banned since 2017, provided projects meet strict disclosure and compliance standards. It also introduces a tough liability regime, making platforms financially responsible for user losses caused by hacks or system failures, even if no negligence is proven.
Missed Deadlines and a Longer Road Ahead
The delay is no longer theoretical. The FSC failed to meet a December 10, 2025 deadline set by lawmakers to deliver a finalized draft. In response, the ruling Democratic Party is now working on a consolidated alternative that could merge competing proposals and be debated during an extraordinary session in January 2026.
Even under an accelerated timeline, full implementation of South Korea’s second-phase crypto regulatory framework now looks unlikely before the second half of 2026.
For an industry that has been waiting years for regulatory clarity, the setback highlights a deeper issue: defining how much control traditional financial institutions should retain in an increasingly tokenized economy.
