South Korea Crypto Regulation 2026: Stablecoin Laws Delayed Over “Turf War”

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Key Takeaways

• The Delay: The “Digital Asset Basic Act” (Phase 2) has been officially pushed to 2026 following a deadlock between financial regulators.
• The Core Dispute: The Bank of Korea (BOK) and Financial Services Commission (FSC) clash over whether banks should hold a monopoly on stablecoin issuance.
• Investor Impact: The crypto gains tax is postponed to 2027, while foreign stablecoins (USDT/USDC) remain in a legal gray area.

South Korea Crypto Regulation 2026: The Standoff

South Korea’s roadmap for a fully regulated Web3 economy has hit a significant legislative wall. The implementation of the Digital Asset Basic Act Phase 2—which would have legalized and standardized the issuance of stablecoins—is now delayed until 2026. This postponement leaves the domestic crypto market in a prolonged state of uncertainty, directly resulting from an intense “turf war” between the nation’s two primary financial authorities: the Financial Services Commission (FSC) and the Bank of Korea (BOK).

FSC vs Bank of Korea Stablecoin Dispute

The paralysis in Seoul stems from two competing philosophies regarding the future of money. The FSC vs Bank of Korea stablecoin dispute is essentially a battle between “innovation” and “control.” The FSC champions a pro-growth model similar to the EU’s MiCA framework, arguing that private fintech firms and crypto companies should be permitted to mint Won-pegged stablecoins. Their stance is that restricting issuance rights solely to banks would stifle competition and drive South Korean blockchain talent overseas.

In contrast, the Bank of Korea maintains a conservative outlook focused on monetary sovereignty. They argue that if non-bank entities are allowed to issue digital currency, it could destabilize the national financial system. Consequently, the BOK has blocked any legislation that does not grant them veto power and strict oversight over issuers.

The “51% Rule” and Bank-Led Crypto Consortiums

Negotiations officially collapsed over the central bank’s controversial proposal for a Bank-led crypto consortium structure. The BOK demanded a clause requiring that traditional commercial banks hold a majority equity stake (minimum 51%) in any authorized stablecoin issuer.

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• The BOK’s View: Banks possess the necessary capital buffers and anti-money laundering (AML) infrastructure to ensure safety.
• The FSC’s View: Mandating majority bank ownership effectively creates a monopoly, rendering agile fintech startups subservient to legacy financial institutions.

Because neither regulator would concede before the legislative session ended, the bill has been shelved for the entirety of the coming year.

Strategic Outlook: Kimchi Premium & Tax Delays

For international traders, this delay creates a complex market environment. The Kimchi Premium outlook is expected to remain volatile through 2026. Without a regulated domestic stablecoin to streamline cross-border liquidity, the friction that causes price disparities on Korean exchanges (like Upbit) will persist.

However, there is a silver lining for retail investors: the South Korea crypto tax delay 2027. While the regulatory framework is stalled, lawmakers have simultaneously agreed to postpone the 22% tax on virtual asset gains until January 1, 2027. This creates a two-year window where trading profits remain tax-free, even as the legal status of USDT USDC Korea restrictions remains ambiguous. Foreign issuers are technically required to establish local branches to operate, but enforcement is likely to be inconsistent until the new laws are passed.

Why This Matters: The failure to pass Phase 2 signals that South Korea is struggling to reconcile its ambition to be a digital hub with its traditional risk-averse financial policies. Until the FSC and BOK find a compromise, the market will likely remain speculative rather than institutional.

Also Read: South Korea’s Banking Giants Unite for WON-Backed Stablecoin Revolution

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