South Korea Advances Won-Based Stablecoin Legislation as Dollar Dominance Concerns Mount

South Korea's ruling Democratic Party is pushing forward comprehensive legislation to enable won-denominated stablecoins, driven by concerns that the Korean currency could be marginalized in the emerging global digital finance landscape following recent US Congressional approval of dollar-pegged stablecoins.

Democratic Party lawmaker Min Byung-deok has introduced three bills that would allow non-financial companies to issue won-based stablecoins beyond the Bank of Korea's authority while establishing a broader legal framework for digital assets, Korea Economic Daily reported on Wednesday.

The proposed legislation also includes provisions for security token offerings and spot market exchange-traded funds backed by virtual assets.

"The STO bill will first go through the standing committee next month," Min announced at a party seminar on Tuesday, adding that "the presidential office's chief policy aide Kim Yong-beom, a blockchain expert, is largely supportive of the bills."

Presidential Priority Amid Global Competition

The stablecoin legislation represents one of President Lee Jae-myung's key campaign pledges, with the appointment of blockchain expert Kim Yong-beom as chief policy aide reflecting the administration's commitment to digital asset advancement. Kim previously led Hashed Open Research, the think tank of Korea's largest cryptocurrency investment firm.

Min warned of the urgency facing Korean policymakers, stating that "when the tsunami of dollar stablecoins arrives, the Korean won may barely be used at all."

The lawmaker suggested leveraging Korea's global cultural and technological assets, including Samsung Galaxy smartphones, K-pop icon BTS, and Korean content, by promoting transactions through won-based stablecoins.

Responding to US Stablecoin Law

The legislative push follows the US Congress's passage of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS Act), which brings cryptocurrencies into mainstream regulation and is expected to boost demand for US Treasuries while cementing dollar influence in digital payments.

Another Democratic Party lawmaker and former vice minister, Ahn Do-geol, is preparing complementary legislation focusing specifically on won-currency stablecoin standards and qualifications. His bills, set for submission next week, would mandate that issuers hold collateral equivalent to the full value of issued cryptocurrencies while strengthening oversight by the Bank of Korea and Ministry of Economy and Finance.

Ahn's proposals include revisions to foreign currency transaction laws and enhanced regulatory coordination between key financial authorities. The bills were developed in coordination with the finance ministry, BOK, and Financial Services Commission following the establishment of a stablecoin implementation task force after President Lee's inauguration.

"The Bank of Korea must be empowered to play its role in maintaining financial stability," Ahn said at the seminar. "If stablecoins are used abroad, they become a form of foreign exchange. That means the finance ministry needs a legal foundation to exercise its authority."

The legislative approach creates a two-pronged strategy: Ahn's bills focus specifically on institutionalizing Korean won-based stablecoins, while Min's legislation serves as a broader framework covering the entire digital asset ecosystem including stablecoins.

Both lawmakers expect their bills to pass through the National Assembly within the year, setting up South Korea as a potential competitor in the global stablecoin market currently dominated by US dollar-pegged cryptocurrencies.