Democratic Party's Final Decision Day: The Battle Over Who Gets to Issue Korea's Won Stablecoin

On March 24, 2026, South Korea's ruling Democratic Party of Korea (DPK) convenes what could be the most consequential meeting for the country's digital asset future. The party's Digital Asset Task Force (TF) is holding its final review session on the draft Digital Asset Basic Act — the long-delayed "Phase 2" legislation that will determine who can issue Korean Won-pegged stablecoins, how cryptocurrency exchanges are governed, and whether Korea can compete in the rapidly evolving global digital finance landscape. The outcome will shape hundreds of billions of dollars in potential market activity and define Korea's monetary sovereignty in the digital age.

Legal Background: A Regulatory Journey Marked by Delays

Korea's virtual asset regulatory framework began with the Virtual Asset User Protection Act, which took effect in July 2024. This "Phase 1" legislation focused narrowly on investor protection — mandating segregation of customer deposits, establishing penalties for unfair trading practices, and creating basic oversight mechanisms. However, it deliberately deferred the harder questions: stablecoin issuance, initial coin offerings (ICOs), exchange licensing, and comprehensive industry governance were all pushed to "Phase 2."

The Phase 2 legislation, formally known as the Digital Asset Basic Act, was originally targeted for submission to the National Assembly in the second half of 2025. That timeline collapsed when the Financial Services Commission (FSC) and the Bank of Korea (BOK) reached an impasse over a single, defining question: who should be allowed to issue Won-denominated stablecoins?

The BOK insisted on what became known as the "50%+1 share rule" — a requirement that any stablecoin-issuing consortium must have banks holding at least 51% of equity. The central bank argued this was essential for monetary stability and the integrity of the Korean Won. The FSC, while sympathetic to a bank-centric model, resisted codifying a specific ownership percentage into law, recognizing that business structures, technological capabilities, and capital formation strategies require flexibility.

President Lee Jae-myung elevated KRW stablecoin legislation to a national priority during his campaign, framing it as a matter of monetary sovereignty against the growing dominance of US dollar-linked stablecoins like USDT and USDC in global crypto markets. This political mandate has been the primary engine driving legislative urgency throughout 2026.

The February Impasse and March Reset

On February 24, the TF held a two-and-a-half-hour meeting with advisory committee members to finalize the bill. It ended without agreement. According to Hankyung (Korea Economic Daily), the two core sticking points remained unresolved: the bank ownership threshold for stablecoin issuers and the proposed 15-20% cap on major shareholders of crypto exchanges.

However, the meeting produced a significant shift in tone. TF Secretary Ahn Do-geol stated that "while creating a perfect system is important, timing matters more right now" — a clear signal that the party was moving away from its previous hardline opposition to the FSC's proposals toward pragmatic compromise. The TF committed to producing a unified bill within approximately one week, targeting early March for policy committee submission.

What emerged from subsequent drafting sessions was revealing. According to Electronic Times (전자신문), the bill draft being reviewed today takes a fundamentally different approach: it focuses on redemption stability rather than restricting issuer types. The most contentious provisions — major shareholder caps, capital requirements, and stablecoin reserve management specifics — have been delegated to enforcement ordinances (시행령) rather than written into the primary legislation. This is a significant architectural choice: the law itself would establish broad principles permitting stablecoin issuance, while the granular rules governing who qualifies would be determined through executive regulation that can be adjusted without returning to the National Assembly.

Three Critical Battlegrounds

The 51% Rule: Dead or Dormant?

The most closely watched question is whether the bank majority ownership requirement survives in any form. The DPK's TF has publicly noted that "it is hard to find global legislative precedents in which institutions from a specific sector are required to hold 51%" — a direct rebuke of the BOK's position. By moving ownership thresholds to enforcement ordinances, the draft effectively creates a regulatory pressure valve: banks could initially dominate stablecoin consortia under conservative ordinance provisions, with the door left open for fintech and big tech participation as the market matures.

This approach mirrors the pragmatic "launch first, liberalize later" strategy seen in other Asian jurisdictions, particularly Japan's phased opening of stablecoin issuance to trust companies and licensed fund transfer operators alongside banks.

Exchange Ownership Caps: Industry Restructuring Ahead

The FSC's proposal to cap major shareholders of crypto exchanges at 15-20% would force dramatic governance changes at Korea's dominant platforms. Dunamu (operator of Upbit, which controls roughly 80% of Korean crypto trading volume) and Bithumb would face particular pressure. Industry stakeholders have proposed an alternative: tiered ownership limits based on exchange size, which would impose stricter caps on larger platforms while preserving flexibility for smaller operators. Professor Choi Seung-jae of Sejong University argued at a National Assembly hearing that regulators should prioritize "less invasive ex-post behavioral regulation" over rigid structural mandates.

Innovation vs. Monetary Control: Korea's Existential Dilemma

Professor Lee Jong-seob of Seoul National University warned that overly restrictive stablecoin regulation "could constrain Web3 ecosystem expansion and isolate Korea." Attorney Jeong Jae-wook echoed this concern, stating that "limiting the achievements of private tech companies will damage national innovation capacity." The fear of becoming a regulatory "Galapagos" — isolated from global standards and unable to compete — has become a rallying cry across the Korean crypto and fintech industries.

The data supports these concerns. Herald Economy reported that Korea's digital asset growth rate already lags Japan's by a factor of six. Every month of legislative delay widens this gap.

Global Context: Where Korea Stands

Korea's stablecoin regulatory development is notably behind its peers. The United States passed the GENIUS Act in July 2025, establishing a federal framework that permits both bank subsidiaries and approved non-bank issuers to issue payment stablecoins — an explicitly open architecture. The European Union's MiCA regulation, effective since June 2024, allows any entity with an Electronic Money Institution (EMI) license to issue stablecoins, with no sector-specific ownership requirements. Japan has operated a dual-track system since 2023, permitting banks, trust companies, and licensed fund transfer operators to issue stablecoins, with JPYC and Progmat Coin already in circulation. Singapore has had the XSGD stablecoin operating under MAS regulation since 2020.

According to analysis by XREX, South Korea remains in the "pre-regulatory phase" — the only major Asian financial center without an operational framework for fiat-backed stablecoin issuance. The contrast is stark: while competitors are iterating on live regulatory regimes, Korea is still debating foundational architecture.

The Market Race: Positioning Before the Starting Gun

Despite legislative uncertainty, Korea's private sector has been positioning aggressively. Samsung Electronics, Shinhan Financial Group, and Hana Financial Group have formed what media have dubbed a "Coin Dream Team" — a consortium preparing for stablecoin issuance, distribution, and integration with existing payment infrastructure. Hana Financial has been expanding global digital asset partnerships, while Viva Republica (Toss) has established a dedicated stablecoin TF and is in discussions with Bithumb on payment system integration.

The most potentially transformative development is the rumored Naver-Dunamu merger, which would combine Korea's largest internet platform (with its massive e-commerce and payment ecosystem) with its largest crypto exchange. Analysts suggest this could create a "Naver-Dunamu-Hana Financial" alliance capable of dominating stablecoin distribution. Woori Bank and BDACS entered the technical verification stage for KRW1, a Won-backed stablecoin prototype, in September 2025, though public issuance remains pending.

What Investors and Industry Participants Should Watch

Today's TF review is expected to finalize the draft for submission to the National Assembly's Political Affairs Committee by late March or early April 2026. Three variables will determine market impact.

First, the issuer framework architecture. If the 50%+1 rule is written into primary legislation, fintech and big tech stocks will likely face downward pressure while bank stocks benefit. If delegated to enforcement ordinances — as current drafts suggest — the market will interpret this as a medium-term positive for non-bank players, pricing in future liberalization.

Second, exchange governance requirements. Confirmation of the 15-20% shareholder cap would trigger governance restructuring at Dunamu and Bithumb, with potential M&A implications. The tiered alternative would be received more favorably.

Third, legislative timeline. If the bill passes the National Assembly within 2026, actual stablecoin issuance could begin by early 2027. However, political variables — including potential filibuster tactics and competing legislative priorities — could push passage into 2027, further extending Korea's regulatory gap with competitors.

Outlook: Two Scenarios for Korea's Digital Currency Future

The optimistic scenario sees today's meeting producing a flexible draft that delegates contentious provisions to ordinances, passes the National Assembly by Q3 2026, and enables a phased market opening where banks lead initially but fintechs gain access within 12-18 months. In this scenario, Korea could have a functioning KRW stablecoin ecosystem by mid-2027, capturing domestic demand currently flowing to dollar-denominated alternatives.

The pessimistic scenario sees continued political deadlock, a bank-monopoly framework that stifles innovation, and legislative passage delayed beyond 2026. In this case, Korea's dependence on USDT and USDC deepens, domestic fintech talent migrates to more permissive jurisdictions like Singapore and Japan, and Korea's position in global digital finance erodes further.

As Hankyung Business noted, 2025 was the year stablecoins became a core agenda item; 2026 is the year that agenda either becomes institutional reality or remains aspirational rhetoric. The KRW stablecoin is not merely a financial product — it is a strategic asset that will determine Korea's standing in global payment networks and its monetary sovereignty in an increasingly digital world. Today's decision by the Democratic Party's TF may well be remembered as the moment Korea chose its path.