Stablecoin Legislation in Korea Myths vs. Facts

August 1, 2025

Recently, discussions on the legalization of stablecoins have intensified in South Korea, primarily led by the Lee Jae-myung government and the Democratic Party. On July 30, a legislative briefing on the ‘Digital Asset Basic Law’ was held at the National Assembly, reflecting a significant increase in social interest.

However, various misunderstandings still exist, as seen in community discussions and article comments. Below, I will summarize some of the common misconceptions and the accurate facts.

1. “If stablecoin legislation is enacted, anyone can easily create one?”

Misunderstanding
“Once the law is established, individuals or small startups can freely create stablecoins, increasing the risk of financial accidents.”

Fact
Even after legalization, the issuance of stablecoins will only be permitted for entities that meet strict requirements (capital, reserves/collateral assets, disclosure, anti-money laundering, etc.).
Only reliable and transparent institutions such as banks or large fintech companies can issue them, so it is not a structure where anyone can create them like ‘meme coins’.

2. “Will the government directly issue stablecoins or monitor citizens?”

Misunderstanding
“The Bank of Korea or the government can directly create stablecoins and monitor all transactions in real-time.”

Fact
The stablecoins currently under discussion are different from CBDC (Central Bank Digital Currency), which is issued and managed by the central bank.
Stablecoins are issued by the private sector (financial companies, fintech, etc.) under strict regulations, and the government only plays a supervisory role.

All transaction records will not be sent to the government in real-time, nor will there be indiscriminate monitoring of citizens' private transactions.
Only legitimate supervision for preventing financial crimes and maintaining market integrity will be strengthened. Unchecked surveillance is fundamentally blocked by privacy protection laws and specific financial information laws.

CBDC: Digital currency issued and controlled directly by the state. It is a separate concept from stablecoins.

3. “Are stablecoins treated the same as Bitcoin? Will existing investors be affected?”

Misunderstanding
“Stablecoins are treated the same as coins like Bitcoin and Ethereum, so they are subject to the same regulations, and existing investors will face significant changes.”

Fact
Stablecoins are fundamentally different in design purpose from general virtual assets like Bitcoin and Ethereum.

Price Volatility: Bitcoin experiences rapid price fluctuations, but stablecoins are pegged 1:1 to fiat currencies (KRW, USD, etc.), resulting in minimal volatility.
Use Cases: The focus is on real-world applications such as payments, remittances, and digital financial infrastructure.

Like major countries abroad (USA, EU, Japan, etc.), South Korea is also in the process of establishing a separate regulatory framework for stablecoins.
Because they are distinct from investment cryptocurrencies, there will be little direct impact on existing investors, and the overall market credibility may even increase.

4. “Aren't all stablecoins decentralized?”

Misunderstanding
“Since it is a coin, it is naturally decentralized.”

Fact
There are various types of stablecoins.

Fiat-Collateralized: (e.g., USDT, USDC) Tokens are issued at a 1:1 ratio by depositing KRW, USD, etc. in actual banks. This is a centralized structure that is subject to strict regulations and transparent supervision.
Crypto-Collateralized/Algorithmic: (e.g., DAI) Issued based on cryptocurrencies or algorithms. Relatively more decentralized structure.

In South Korea, to ensure safety and regulatory compliance, the focus is expected to be on 'fiat-collateralized' stablecoins.
While centralized stablecoins are advantageous for accountability and regulatory response, ongoing monitoring is necessary for transparency of issuers.

Are you curious about the introduction of cryptocurrency payments?

Stablecoins are gaining attention as a core infrastructure for digital financial innovation and the enhancement of payment systems.
Even after legalization, contrary to vague concerns about ‘anyone being able to issue’ or ‘government surveillance’, they will be operated transparently under strict regulations.

Particularly, key advantages such as reduced transaction fees, fast settlements, and global accessibility offer innovative value that surpasses the limitations of existing payment systems. As a more significant market expansion is expected from the first half of 2026, now is the optimal time to consider the introduction of cryptocurrency payments.

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