South Korea Policy Advisors Recommend Interim Licensing and Flexible Stablecoin Rules Ahead of Digital Asset Basic Act
Advisors recommend temporary licensing and flexible reserves for digital asset issuers prior to upcoming phase two regulations.
South Korean financial policy advisory bodies have urged regulatory authorities to introduce interim licensing guidance and adaptable reserve frameworks for stablecoin issuers ahead of the full implementation of the country’s comprehensive Digital Asset Basic Act.
The proposal emphasizes the need to establish temporary regulatory bridges to prevent market disruption and compliance bottlenecks while parliament drafts the second phase of South Korea‘s virtual asset legal architecture. Under the suggested interim framework, digital asset issuers and virtual asset service providers could obtain conditional operating licenses under flexible regulatory parameters.
Tailored Rules for Stablecoin Issuers
For stablecoin issuers specifically, the policy report advocates for tailored reserve requirements and collateral management rules rather than imposing rigid, bank-level capitalization mandates immediately. This calibrated approach is designed to allow non-bank fintech firms and technology providers to participate in fiat-pegged token issuance without exposing the broader financial system to unmanaged systemic risk.
The recommendation arrives during preparations for the Digital Asset Basic Act, which builds upon the Virtual Asset User Protection Act enacted in July 2024. While that initial legislation focused primarily on safeguarding user deposits, preventing unfair trading practices, and requiring asset segregation, the upcoming second-stage law specifically targets token issuance standards, corporate disclosures, stablecoin operational rules, and institutional market access.
Lessons from Terra and International Alignment
South Korea’s structured push toward stablecoin regulation remains sharply focused on preventing structural vulnerabilities similar to the May 2022 collapse of the Terra-Luna network, an event that wiped out an estimated $40 billion in market capitalization globally. In response, international regulatory bodies have moved to standardise stablecoin frameworks. The European Union recently enacted comprehensive issuer obligations through its Markets in Crypto-Assets regulation, which mandates strict liquid asset reserves and operational licensing for electronic money tokens.
Industry participants expect that interim guidance from South Korean regulators will provide immediate legal certainty for domestic firms testing cross-border payment solutions and fiat-backed digital tokens. The Financial Services Commission is evaluating the report’s recommendations through its virtual asset legislative task force as public discussions continue.
