South Korea’s Banks Move Fast on Stablecoins Ahead of October Legislation and Potential Circle Collaboration

South Korea Prepares to Regulate Stablecoins with Banks Eyeing Circle Partnership

South Korea’s Financial Services Commission (FSC) plans to submit a stablecoin regulation bill to the National Assembly in October, aiming to create a more structured digital asset market.

The proposed legislation is expected to set clear rules on stablecoin issuance, collateral management, and internal risk controls.

Lawmaker Park Min-kyu confirmed receipt of the FSC’s submission plan during a stablecoin policy discussion on 18 August, noting that the bill is likely to become part of the government’s second-phase digital asset law currently under preparation.

President Lee Drives Local Currency Stablecoin Market

President Lee Jae Myung, who assumed office earlier this year, has prioritised digital finance policy, pledging to create a robust market for stablecoins pegged to the Korean won.

Lee Jae-myung is a South Korean politician and lawyer who is the current President of South Korea, having assumed office on 4 June 2025.

His administration sees the initiative as a way to reinforce national monetary sovereignty amid the growing role of digital currencies globally.

Under his leadership, South Korea has also advanced spot Bitcoin ETFs and strengthened enforcement against unregistered operators and KYC violations, signalling a shift toward a more regulated and institutionalised crypto environment.

Banks and Tech Firms Gear Up for Stablecoin Adoption

Major South Korean banks, KB Kookmin, Shinhan, Hana, and Woori, alongside tech giants Naver and Kakao, are actively preparing to enter the stablecoin market.

Several companies have applied for related trademarks, while banks have established internal divisions or councils dedicated to virtual asset management.

KB Financial Group operates a “Virtual Asset Response Council” with a permanent Stablecoin Division.

Shinhan Bank is testing KRW stablecoin payment systems.

Hana Financial Group is analysing infrastructure and business opportunities.

Woori Bank has formed a Digital Asset Team while filing trademarks in anticipation of regulatory approval.

Collaboration on Domestic and International Stablecoins

Executives from the four banks are reportedly reviewing plans to meet with Heath Tarbert, president of USDC issuer Circle, during his visit to Seoul next week.

Discussions are expected to focus on cooperation in domestic distribution, remittance of dollar-denominated stablecoins, international transactions, and potential issuance of won-pegged stablecoins.

Some reports indicate that both individual and joint meetings with senior officials from each bank may take place, highlighting the strategic importance of cross-industry alignment.

Central Bank Calls for Caution Amid Expansion

Despite government support, the Bank of Korea has expressed caution.

Governor Lee Chang-yong noted that issuance of won-pegged stablecoins should be limited to licensed banking institutions, warning that uncontrolled approvals could disrupt the country’s strict foreign currency rules.

Governor Lee Chang-yong is the current head of the Bank of Korea, the central bank of South Korea.

The FSC’s forthcoming legislation aims to mitigate these risks by defining eligibility criteria and operational standards for issuers.

Regional Competition Intensifies

South Korea’s push aligns with broader regional activity.

Japan plans to launch its first yen-denominated stablecoin through fintech firm JPYC, while the United States recently passed the Genius Act, establishing a federal regulatory framework for stablecoins.

These moves underscore a global shift toward formalising digital assets, prompting South Korea to accelerate its legislative efforts to remain competitive.

Is South Korea Ready to Compete Globally in Digital Finance?

Coinlive observes that South Korea is taking bold steps to enter the stablecoin market, but significant challenges remain.

While major banks and tech firms are preparing infrastructures, the market’s success hinges on cohesive regulatory execution and cross-industry collaboration.

With rising competition from Japan, Singapore, and Hong Kong, the country must prove it can maintain innovation without compromising oversight.

But, can South Korea’s stablecoin ecosystem thrive under tight regulation, or will structural complexity and cautious policymaking slow its global impact?