South Korea's ruling and opposition parties filed dueling stablecoin legislation on Monday, setting up a parliamentary battle over crypto regulation as the nation seeks to establish its place in the global crypto economy.
Democratic Party lawmaker Ahn Do-geol has submitted comprehensive regulations for won-pegged stablecoins that explicitly ban interest payments. At the same time, the ruling People Power Party's Kim Eun-hye filed competing legislation that omits any mention of a prohibition on interest.
Both bills grant emergency powers to financial regulators, with the Bank of Korea authorized to request data and conduct inspections supporting monetary policy.
The legislative clash comes as President Lee Jae-myung pushes a crypto-friendly agenda and global powers race to regulate stablecoins, which have emerged as mainstream payment methods due to lower transaction fees and near-instant settlement.
"Korea's stablecoin regulation requires a balanced approach that combines essential government oversight with substantial private sector freedom," said Rich O., regional manager APAC at hardware wallet company OneKey.
"While government control is necessary for monetary sovereignty, consumer protection, and systemic risk management, excessive restrictions could undermine Korea's competitiveness in the global digital asset landscape," he told Decrypt.
Ahn's bill imposes stricter requirements, mandating stablecoin issuers obtain Financial Services Commission approval and maintain a minimum capital of $3.6 million (5 billion won).
"This bill stems from discussions within the DP's Committee on Future Economic Growth Strategy and reflects President Lee's campaign pledge," Ahn said, according to Korea Joongang Daily.
All tokens must be fully backed by high-liquidity assets, with interest payments explicitly banned, according to the bill text.
Kim's legislation focuses on licensing requirements and comprehensive disclosure obligations, mandating the submission of whitepapers and product descriptions for stablecoin issuers.
Her bill aims to "promote innovation in digital asset payments" and "enhance the reliability of the digital asset market," according to the legislative text.
Reserve requirements and protections
The Democratic Party proposal requires 100% backing through cash, demand deposits, government bonds, or municipal bonds.
In bankruptcy scenarios, reserve assets would be prioritized for user reimbursement within three business days and "cannot be seized or used as collateral," Ahn reportedly said.
"Like the U.S. with its digital dollar, Korea must enter a new era of financial sovereignty with a won-based stablecoin,” he said.
The People Power Party bill includes provisions for "matters related to the redemption of fixed-value digital assets and the composition and management of reserve assets," along with requirements for issuers to maintain financial and management soundness.
Bank of Korea Governor Rhee Chang-yong showed support for won-backed stablecoins last month while emphasizing the need to examine their impacts on foreign exchange management.
"The regulatory framework should focus on outcomes rather than prescriptive methods," Rich O. said, advocating for clear standards while allowing innovation in yield mechanisms and cross-border functionality.
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