South Korea’s Ruling Party Unveils Plan to Allow Stablecoins

South Korea's new President, Lee Jae-myung, is moving quickly to deliver on his campaign pledge to allow local companies to issue stablecoins, giving a further boost to one of the world's most active digital-asset markets.

Lee, a progressive leader who defeated his conservative rival in last week's presidential election, has been a vocal proponent of stablecoin adoption.

On Tuesday, Lee's ruling Democratic Party proposed Digital Asset Basic Act, aimed at improving transparency and encouraging competition in the crypto sector. Under the act, South Korean companies can issue stablecoins if they have at least KRW 500 million ($367,876 or roughly Rs. 3 crore) in equity capital while ensuring that refunds are guaranteed through reserves.

South Korea is already a hotbed for crypto activity. More than a third of the population, or around 18 million people, participate in digital-asset markets. On some days, trading volume on local crypto exchanges surpasses turnover on the Kospi and Kosdaq stock indexes.

Stablecoins are cryptocurrencies pegged to another asset, typically the US dollar. They are gaining global momentum as regulatory frameworks develop. In the US, Congress is set to vote Wednesday on key stablecoin legislation, and President Donald Trump has identified the sector as a policy priority via executive order.

South Korea's act also stipulates asset-linked digital assets, including stablecoins, must be approved by the Financial Services Commission, a text of the act released by the ruling party said.

Stablecoin trading is surging in South Korea. Transactions involving USDT, USDC and USDS on five major domestic exchanges reached KRW 57 trillion (roughly Rs. 31,303 crore) in the first quarter, Yonhap News reported, citing Bank of Korea data.

Still, Lee's initiative is facing some resistance from the central bank. Bank of Korea Governor Rhee Chang-yong warned last month that stablecoins issued by non-bank entities could weaken the effectiveness of monetary policy. He argued that the central bank should take the lead in regulating a KRW-pegged stablecoin.

The global financial industry is also taking note. Banks including Deutsche Bank and Santander, along with major tech firms, are exploring stablecoin issuance. Shares in the world's second-largest stablecoin issuer Circle have soared after its IPO last week.

South Korea's push is fueling a rally in local digital-asset stocks. Shares of KakaoPay Corp. jumped as much as 18 percent on Tuesday, the highest since January 2024, on expectations Lee's administration will back a KRW-based stablecoin.

Still, some analysts are cautious.

“The rally in Kakao-related shares is fundamentally unjustifiable, as any concrete benefit from Lee's stablecoin policy remains uncertain,” JPMorgan analysts Stanley Yang and Jihyun Cho wrote in a note.

South Korea continues to bear the scars of the TerraUSD collapse in 2022, which wiped out $40 billion in value and remains a cautionary tale as the country re-engages with stablecoins.

© 2025 Bloomberg LP

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